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What’s in a name? Investment industry seeks title clarity

The investment industry is seeking clarity on the array of titles and designations used in the sector.

Tom Young/iStockphoto

The investment industry wants to set out clearer guidelines regarding the bewildering array of business titles and financial designations used in the sector.

The proliferation of titles in the retail investing business – everything from "financial adviser" and "financial planner" to "wealth adviser" and "retirement specialist" – has become a concern, says the Investment Industry Regulatory Organization of Canada.

"Protecting investors is core to IIROC's mandate and an important element of protection is helping to ensure that investors can make informed decisions," the group's president and chief executive officer Susan Wolburgh Jenah said in a news release Tuesday.

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"With many titles in use, identifying best practices that are embraced and implemented by IIROC-regulated firms will provide investors with better descriptions and understanding of the services offered to retail clients."

Many of the business titles, on their own, fail to provide a meaningful description of the type of services or investment products that a licensed representative can offer, says the group.

In some cases, use of a title such as "senior vice-president" implies that the individual has executive responsibilities when in fact he or she is not a corporate officer of the firm, says the national self-regulatory organization.

The variety of impressive-sounding financial designations is also confusing, with some titles being granted after a weekend seminar or through online self-study and a self-administered exam, says the organization.

And very few firms tell their clients what the financial designations actually mean in practice, it says.

The results of focus groups with investors found that some consumers view financial designations skeptically, suggesting that training and educational requirements are not as rigorous as those in other professions.

Some investor representatives said the term "adviser" implies the individual has a fiduciary duty while they viewed the role as that of a salesperson.

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Focus group respondents generally criticized titles implying expertise with senior concerns, "because of a concern that they target a vulnerable segment of the market and there does not appear to be a generally recognized and uniform standard that must be met before someone can identify themselves as possessing specialized knowledge in this area."

IIROC has provided draft guidance regarding titles and financial designations and is asking for feedback.

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