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What’s In a Name – Decoding Financial Designations

As we write articles for our newsletter and our website, we throw around many terms that we just assume that everyone knows. We reference regulatory organizations like the SEC (the United States Securities and Exchange Commission), FINRA (the Financial Industry Regulatory Authority), the California Department of Corporations, and others. We also use many terms to reference ourselves and others in the financial services industry, such as Registered Rep, Financial Advisor, Registered Investment Advisor and Financial Planner. These many terms can be confusing to investors; who do you trust, and who oversees my investments and the people that I trust with these investments? Hopefully we can clear up some of the confusion here, and at the same time show you why you should at least be talking to the South Coast Team.

A Registered Representative is an individual licensed to sell securities, and must pass a test administered through FINRA. There are MANY different classifications of registered reps, from those licensed to sell only mutual funds to a General Securities (Series 7) rep that is licensed to sell all securities. The Series 7 exam is a comprehensive exam in which approximately 65% of first-time test takers are successful. Registered reps have a duty to their clients to present only investments that are suitable for their particular financial situation, and they are overseen by the self-regulatory organization FINRA. Registered reps are generally compensated through commissions on the sales that they make.  A Financial Advisor is a broad term that casts a large net covering many professions. A financial advisor can be a CPA, a bookkeeper, a stockbroker, and yes, a registered rep. there is no set definition of what a financial advisor is or what he does, and anyone who advises people on how to invest their money can and will use this title. In short, a financial advisor should have licensing and qualifications that you can verify.

A Registered Investment Advisor (RIA) is an entity, not a person. People operating under the registered investment advisor umbrella are Investment Advisor Representatives (IAR). This designation holds the rep to an additional standard, called a fiduciary duty to the client. Basically, this means that the rep has a responsibility to do whatever is in the best interests of the client. Per the Investment Advisors Act of 1940, advisors are sworn to put the clients’ interests ahead of their own. There is a state exam that must be taken to qualify as an investment advisor representative, administered through FINRA. This exam is much shorter and does not cover the wide range of securities that the Series 7 exam covers. Investment advisor representatives (working through an RIA) are generally compensated on a fee basis, either charging a flat fee or more commonly a percentage of assets under management, and they are overseen by state authorities or, if large enough by the SEC.

A Financial Planner is a financial architect. The goal is to take the entire financial picture into account and to help the client build a plan that will be unique to their client’s financial circumstances, and to assist the client in strengthening their financial foundation and creating the blueprints for a bright future. The client may pay a fee for the planning service, or it may be incorporated into the fees and/or commissions that the client pays as they make the recommended investments. The client should be a collaborator on the plan with the financial planner, and the planner often takes on the role of the client’s personal Chief Financial Officer, consulting on all financial decisions the client contemplates. A financial planner is most often also a registered rep and an investment advisor representative.

It’s difficult to know who to trust, and blurred lines between advisers and brokers don’t help the average person to make informed decisions. Getting to know you advisor and the role that they are to play is critical in developing the relationship that breeds this trust. The South Coast team act in many capacities for our clients, each according to the individual needs and desires of our clients. We consult with our clients and assess their wants and needs. We perform a full scope of planning services for those who desire them, and in all of our functions we present solutions for the issues our clients’ want addressed. We always place our clients’ interests ahead of our own, and this has resulted in a growing business that we all truly love and appreciate. We feel the only way to continue to grow our business is to listen to our clients and to perform the tasks they ask of us, whether that involves specific product solutions to address a perceived need or a complete financial plan for the future. We truly appreciate the clients that we work with, and we encourage those who have not yet checked us out to call us and experience the South Coast difference.

– Posted by Jeff

South Coast Investment Advisors, LLC. All rights reserved. Chris Vizzi, Kelly Clyde, and Michelle Vizzi are Registered Representatives offering securities and advisory services through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC.

South Coast Investment Advisors and Independent Financial Group are not affiliated.
Licensed to sell securities in AZ, CA, ID, IL, MO, NC, NV, NY, TX, WA, WI - CA Insurance License #OE65912

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