The World of Investment Advice Professionals

June 7, 2018

The World of Investment Advice Professionals

June 6, 2018 | Beth Glavosek | Blue Vault

In the last blog post, we offered an overview of the types of firms that sell alternative investments. Within the channels of Independent Broker Dealers, Registered Investment Advisers, and Wire Houses, investors can expect to work one-on-one with an investment professional who will provide customized investment advice, financial planning services, and/or brokerage services (such as buying or selling stock or bonds).
Investors may encounter those who refer to themselves as registered representatives, while others are registered investment advisers, financial planners, financial advisors, or brokers. They also may, depending upon their level of training or certification, hold special designations such as Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA). But, what does it all mean, and what are the similarities and differences?
The Financial Industry Regulatory Authority (FINRA) intentionally differentiates advisers (spelled with an “e”) because it says the laws that are specific to governing this type of investment professional spell the title this way. According to FINRA, “Although the terms sound similar, investment advisers are not the same as financial advisors and should not be confused. The term financial advisor is a generic term that usually refers to a broker or a registered representative. By contrast, the term investment adviser is a legal term that refers to an individual or company that is registered as such with either the Securities and Exchange Commission (SEC) or a state securities regulator. Common names for investment advisers include asset managers, investment counselors, investment managers, portfolio managers, and wealth managers.”

Key terminology

An investment adviser representative (IAR) is someone who works for and gives advice on behalf of a Registered Investment Adviser (RIA) firm. Investment advisers who manage $110 million or more in client assets must register with and be overseen by the SEC. Advisers who manage less than $110 million must register with and be overseen by state securities regulators.
A registered representative is primarily a securities salesperson and may also go by such generic titles as financial consultant, financial advisor, or investment consultant. He or she works for a broker, stockbroker, broker/dealer, or other brokerage firm. Broker/dealer firms must register with the SEC and be members of FINRA. Individual registered representatives must register with FINRA, pass qualifying examinations, and be licensed by their state securities regulators. 


It’s worth noting that no special training or designation is needed in order to call oneself a ‘financial planner.’ A Certified Financial Planner, however, is someone who has taken extensive coursework and received certification through the CFP Board. The CFP Board notes, as a word of caution to investors, that financial planners are not regulated as a separate and distinct profession, and are not required to meet basic competency or ethical standards.

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Broker Dealer Educational Summit 2016
April 14, 2016

The Blue Vault Summit could not have been more perfectly timed. This gathering of the Broker Dealer and Sponsor communities provided insightful and open discussion from several vantage points. These conversations are paramount, especially in a time of significant regulatory change.

*Alternative Investment Sponsors may be contributing members of Blue Vault, which could create potential conflicts of interest. Blue Vault subscribers and followers should consider this in their review and analysis. Information is intended only for institutional, broker dealer or registered investment adviser use. This information is prohibited for use by the general public.