Financial planner, wealth manager, financial dream coach – these are just a few of the many titles I’ve seen advisors use to describe themselves. Some titles and designations are worth a lot more than others. You may know that, but chances are your clients do not.
In the loosely regulated world of financial advisor titles, it’s important to figure out how to describe yourself, both to comply with regulations and to show your value. Here’s how the government and consumers see your title – and some strategies to help get your message across.
Does the SEC regulate financial advisor titles?
The SEC regulates one title and one title only: investment advisor (or adviser, with an “er”). The SEC set this regulation under the Investment Advisers Act of 1940. Basically, this law defined that if you give investment advice for a fee, then you’re an investment advisor.
It’s a protected title. Someone cannot call themselves an investment advisor unless they work with a firm that has registered with the government, either the state or federally with the SEC depending on how much money they manage.
This regulation helps investors distinguish between someone making money by giving advice versus someone who makes commissions selling investments as a broker-dealer. Consumers perceive the roles differently, too. A Mercatus study asked consumers to group these titles with professions in other industries. They put financial advisors with doctors and lawyers while putting brokers with other sales roles like life insurance agents and car dealers.
Where things get confusing is that there are dually registered broker-dealers, meaning they handle both roles. They can describe themselves as investment advisors even though they could also earn commissions selling investments.
A client might not clearly understand what role a dually registered advisor is playing when they meet. A few years ago, the SEC considered a proposal to prohibit representatives of broker-dealers from using the term advisor. However, they have abandoned this effort for now.
How do unregulated titles play into consumer confusion?
When it comes to other names for financial advisors like wealth manager, financial planner or retirement planner, there are no government requirements. Anyone can describe themselves using these names.
The lack of regulation and compliance in financial services industry titles allows people to disguise what they do. A study in the International Journal of Consumer Studies found that titles influence what consumers expect from financial professionals. Consumers could tell just from the title that financial advisors and financial planners are advice professionals, whereas stockbrokers and life insurance agents are sales professionals. But there’s nothing stopping an insurance agent or stockbroker from using a title that implies they work in an advice-based role.
As a result, consumers cannot easily tell what someone does based on their title. Let’s say someone describes themselves as a retirement specialist. Is this person an investment advisor? A broker? A life insurance salesperson? A health and lifestyle coach? Any one of them might use this title.
Industry trade groups have stepped up to address the issue. Financial professionals cannot use certain designations unless they meet the conditions set by the regulating trade group, like the CFP Board and the Certified Financial Planner® (CFP) designation.
While an improvement, it’s still not a perfect solution for consumers. Some designations, like the CFP, require years of study and professional experience before someone can use them. Others, like the Certified Senior Advisor (CSA), are comparatively easier to get. For the typical client, though, they all sound similar despite having very different financial advisor compliance requirements.
What title should I use?
Given the confusion about titles, financial advisors must spend time thinking how they describe themselves to get their value across to prospects.
If you work for a very large firm, the chances are there will be some standardization of titles. You’ll just have to use what they allow. However, if you can decide what to call yourself, this could be a marketing opportunity. Consider what kind of clients you’re looking for with regard to your title.
In the more affluent space, it’s common for financial advisors to describe themselves as wealth managers. If you’re a partner of your firm, using that term adds an extra layer of sophistication. Advisors looking for younger clients tend to call themselves financial planners. Those just starting out in the industry might call themselves para-planners.
How does this impact my financial advisor marketing strategy?
When it comes to handling your financial advisor marketing, you need a concise, clear explanation of what you do. Imagine you’re in the grocery checkout line and you’re trying to explain your business to someone before they get to the register. How would you do it?
In this situation, a title like wealth manager works well. People already have an idea what it means, and you can fine-tune to your specialties. “I’m a wealth manager. I work with affluent clients, especially small business owners, to help them build wealth.” It’s a clear message with a clear purpose. On the other hand, if you described yourself as a financial dream coach, how would you even begin explaining that role in a sentence or two?
Consider the competitive landscape as well. These days most financial advisors in the high-end space call themselves wealth managers. If you call yourself a financial analyst instead, it could be a disadvantage as clients might think you do something different. While there are places in financial advisor marketing where standing out might make sense, your title isn’t one of them.
Also think about how potential clients seek out an advisor. “Financial advisor” is searched 167,000 times per month on Google. “Wealth manager” receives just 3,600 searches per month. But that doesn’t necessarily mean you should ditch wealth manager as a title. Again, it may resonate better with your target client. Or, say you’re in a large market and it’s incredibly difficult to rank near the top of Google for “financial advisor” in your city. You may have a better path using wealth manager or financial planner.
The point is, there is no single “right” answer if you can select your own title. Just make sure it appeals to your target market.
What about disclosures?
The government requires you to provide certain disclosures to your clients before doing business. The necessary disclosures don’t depend on your title as much as what role or service you’re providing. If you describe yourself as a financial planner but work as an investment advisor, you’d still need to provide the standard investment advisor disclosure forms, usually your Form ADV. Based on the work you do, your firm should complete the mandated provider forms for your financial advisor compliance requirements.
What are my obligations as a fiduciary?
One area where I do think we should do better in the investment advisory space is with disclosing what it means to be a fiduciary. Investment advisors and those with certain designations like the CFP must operate as fiduciaries for their clients. That applies even if they use a different title.
It’s not enough to just tell clients you operate as a fiduciary. Take the time to make sure they know what that means. Discuss how you put their interests ahead of your own for investment advice and that your recommendations will be compensation neutral: you don’t consider how you get paid for giving advice, but rather focus on giving the best advice possible. Practice explaining that in the same clear way you use for your title.
How do I communicate my value?
Advisors are already swimming against the tide in an environment where many consumers don’t trust financial services. Against this backdrop, clarity of communication is important. I believe the best way to communicate your value is by keeping your message clear, concise and honest. “I’m a wealth manager, here’s what I do. I’m a fiduciary, here’s what that means.”
A client needs to understand what you do before they will trust you with their money. Overly technical titles might seem impressive to you, but could scare away non-financial experts. By using this strategy, you can better demonstrate your expertise and your value in this landscape.
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