The North American Securities Administrators Association (NASAA) recently voted to adopt a model rule prohibiting the misleading use of the title “advisor” or “adviser” by unregistered individuals that are broker dealers. This new model rule seeks to provide greater transparency and clarity for investors, aligning title usage with an individual’s actual licensure and scope of responsibility.

The Background

Investor confusion over titles such as “financial advisor,” “wealth adviser,” and similar designations has been an ongoing concern among state regulators. Many retail investors mistakenly believe these titles indicate that an individual is held to a fiduciary standard—when in fact, they may only be registered as broker-dealers and not as investment adviser representatives.

To address this, NASAA’s model rule aims to limit the use of “advisor” or “adviser” titles to those who are properly registered as investment adviser representatives under state or federal law.

What the Model Rule Says

The rule explicitly states that broker-dealer agents may not use the terms “adviser” or “advisor” in their title unless they are dually registered as investment adviser representatives.

As NASAA stated, “This section prevents broker-dealers and agents from misleading investors regarding the professional capacity in which their services are provided,” and aims to ease investor confusion that may result from the blurring of brokerage and advisory services. This rule does not impact individuals who are properly registered and regulated under the Investment Advisers Act of 1940 or applicable state regulations.

Importantly, the rule also outlines expectations for firms to monitor and enforce the appropriate use of professional titles among their representatives. This places a renewed emphasis on supervisory responsibilities related to marketing materials, business cards, digital presence, and general client communications.

Implications for Compliance Professionals

Compliance teams at broker-dealers and dual registrants should take this opportunity to:

  • Review existing title usage across the firm, particularly in client-facing materials.
  • Ensure proper registration for anyone using titles that include “adviser” or “advisor.”
  • Update supervisory procedures to monitor ongoing compliance with title usage guidelines.
  • Train registered representatives and agents on the distinction between broker-dealer and investment adviser registrations and the associated regulatory expectations.

Firms should also prepare to address potential questions from clients regarding any changes in title usage, ensuring consistent and compliant messaging that reinforces the firm’s commitment to transparency and regulatory integrity.

Looking Ahead

While the model rule itself is not enforceable until adopted by individual states, NASAA members have now voted to formally adopt these changes to align more closely with the provisions of the SEC’s broker conduct rule, known as Regulation Best Interest (Reg BI). Compliance professionals should stay ahead of this shift by proactively reviewing policies and procedures and preparing for state-level adoption, which may occur at different paces across jurisdictions.