What’s in a name?
Well, for those working in the financial services industry, the title that accompanies your name can make a difference.
Take, for example, the title of ‘financial advisor.’ The spelling of this job title using an “or” at the end tends to be the typical spelling used in today’s day and age to describe an individual who aids members of the public with their personal finances.
Although the slightly differently spelled ‘financial adviser’ with the “er” on the end is often used to describe the same job description, even though the “or” version may be more common in modern times.
However, a closer look reveals that while these two job titles are perceived to be the same thing, they may not necessarily be from a legal perspective.
Someone using the term “financial adviser” is likely to be a Registered Investment Adviser, or rather, someone who is properly licensed to offer investment advice through the Investment Advisers Act of 1940.
Investment advice, in this sense, means advice that is given by a professional to clients regarding the purchase of securities, (think mutual funds here), or things like the trading of stocks on the stock market, which are known as equity securities. (There is also the existence of debt securities, such as bonds, which advisers are also licensed to advise on).
Notice that the term “advisers” itself in the 1940 Act is even spelled using the “er” version.
Now, the term “advisor,” on the other hand, can be used by financial services professionals who are helping clients with other matters, such as budgeting or insurance needs, basically those financial services that don’t involve security investments.
All the while, outside the world of investment advice, it doesn’t seem to matter what you call yourself, since the terms can be used pretty synonymously. Both “advisor” and “adviser” seem to be defined in a nearly identical way, meaning the real difference lies not in the English language, but in how a financial services professional is licensed to assist clients.
Now, all that said, there is one more term that people tend to use as a “catch-all” title, but which in reality is different all together, and that is financial planner.
In the world of financial services, the term financial planner often refers to someone who is a Certified Financial Planner®, which is a designation that is actually a registered mark.
In order to hold oneself out as a “financial planner,” that person must be certified as such, which is done through the CFP Board.
This means completing a CFP Board education program and sitting for the CFP® exam, both of which are intensive endeavors.
Once you are a Certified Financial Planner®, however, you can think of yourself as separated from the crowd, since the designated mark could mean a higher income potential as well as an overall greater respect as a professional.
So, folks, remember, when we’re talking about job titles in the financial services sector, not all names are created equal.