How Registered Investment Advisers Became Financial Advisors

Some job titles don’t tell you much.

In the decades following the crash of 1929 and the Great Depression, stockbroker was an off-putting term. To improve their image, wirehouse brokers began referring to themselves as financial advisors. Would the public confuse financial advisors with actual investment advisers? Of course.

Regulators and consumer advocates have been trying to dispel the confusion ever since. This year, the SEC’s Regulation Best Interest generally will bar brokers from referring to themselves as advisors or advisers unless they actually wear two hats and have registered as investment advisers.

A generation ago, that SEC requirement might have been helpful. In our age of passive investing, what’s the point?  Advisers no longer need to give much investment advice. What clients mostly require is financial guidance, usually tax related. Where to stash their investments, for instance: Taxable account? Roth IRA? 529 plan? Revocable trust? Special needs trust? GRAT? Donor advised fund…?

A small advisory firm that creates investment programs with index funds recently opened an office in our fair city. One Day in July (bet they can tell you a good story about that name) doesn’t identify itself as a registered investment adviser. In mailings and on their web site, they're financial advisors.