NASAA Votes to Ban Use of 'Advisor'/'Adviser' by Unregistered Broker-Dealers

In a decisive move to strengthen investor protections and close regulatory loopholes, members of the North American Securities Administrators Association (NASAA) have voted to amend the association’s Model Rule on Dishonest or Unethical Business Practices of Broker-Dealers and Agents. The update expressly prohibits broker-dealer agents from using the titles “adviser” or “advisor” unless they are also properly registered as investment advisers under state or federal law.

The announced change is intended to curb what NASAA sees as a misleading practice: the use of professional titles that can confuse retail investors into thinking they are receiving fiduciary advice when they are not. The amendment also incorporates key elements of the SEC’s Regulation Best Interest (Reg BI), including the duty of care requirement when making investment recommendations to retail clients.

Closing Gaps and Aligning Standards

“The amendments adopted today will boost investor protection and help foster uniformity on these important issues across federal and state law,” NASAA stated following the vote.

By restricting the use of the “advisor” and “adviser” titles, NASAA aims to eliminate a long-standing source of investor misunderstanding. Many retail investors associate these titles with fiduciary obligations, which require professionals to act in clients' best interests. However, prior to the change, broker-dealers were not always held to fiduciary standards unless dual-registered or operating under certain advisory capacities.

A 2021 NASAA study found that 7% of firms subject to Reg BI were using the titles inappropriately. While Reg BI requires broker-dealers to act in the best interest of retail customers when recommending securities, the recent amendment aims to reduce confusion and address lingering concerns about whether those standards equate to full fiduciary protections.

The newly adopted amendments do more than restrict title use—they also integrate aspects of Reg BI’s duty of care directly into NASAA’s Conduct Rule. This further aligns state-level standards with federal expectations and may help eliminate inconsistencies across regulatory jurisdictions.

Implications for Broker-Dealers and IARs

While the rule itself applies only to NASAA’s model language—meaning individual states must adopt it for the changes to take effect locally—it is expected to serve as a roadmap for future legislation and regulatory enforcement across the U.S.

Broker-dealers who currently market their representatives as “advisors” may need to change job titles, marketing materials, and disclosure language—unless those individuals are also registered as Investment Adviser Representatives (IARs). Firms will also need to review training, supervision, and compliance procedures to ensure alignment with the new standards.

Meanwhile, registered investment advisers and IARs stand to benefit from a clearer distinction between their fiduciary role and the more transactional focus of broker-dealer agents.