Corporate & Securities Law

In recent years, professional designations and credentialing programs have not only helped advisers satisfy their continuing education requirements, but also have provided advisers with a valuable marketing tool that helps them stand out from their competitors. 

However, as a result of a recent amendment to Form ADV Part 2, advisers now will be required to provide more detail about professional designations that they use in their practice. The new regulations do not require advisers to disclose designations, but those who do must include a sufficient explanation of minimum qualifications to obtain the designation. 

For designations that require rigorous training, such as the chartered financial analyst (CFA), disclosure on the ADV will likely only help bolster the client?s confidence in the advisor.  However, this transparency could call into question professional designations that do not require much effort or training to obtain, and in turn call into question the advisers using such designations. 

Concerned by the growing number of professional designations used by advisers today, in 2008 the North American Securities Administrators Association issued guidelines aimed at preventing abuse of professional designations by advisers.  FINRA rules also prevent advisers from using professional designations in a manner that would mislead a customer. 

Advisers should therefore exercise caution when making the decision to use a professional designation as part of their practice.  Advisers are encouraged to seek designations with a more rigorous training curriculum, continuing education requirements, and those designations that have been accredited.  And most importantly, advisers should not to use any designation in a manner that could mislead a client.

If you are an adviser and have questions about the new credential disclosure rules, compliance with the amendments to Form ADV Part 2, or about a professional designation, contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your matter.