Investor Bulletin: Financial Professionals’ Use of Professional Honors – Awards, Rankings, and Designations

09/14/2017

The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to educate individual investors about the professional awards, rankings, and designations that financial professionals often use to market themselves to prospective clients.

Financial professionals often use awards, rankings, and designations to distinguish themselves from their competitors, including to imply a higher degree of sophistication, expertise or success than others in the same profession.  While in some cases this type of information may help an investor make an informed decision in choosing a financial professional, in some cases it can be misleading – some professional awards, rankings, and designations provide little or no basis on which to judge the skill or abilities of the financial professional.  

If a financial professional publicizes any professional awards, rankings or designations, there may be circumstances that make the award, ranking, or designation less meaningful or misleading, including:

  • the criteria to receive the award or designation was so minimal that essentially any person who submitted an application would receive the award or designation;
  • the financial professional or firm paid a fee to receive an award, ranking, or designation;
  • the financial professional was required to be a member of an organization to receive the award, ranking, or designation;
  • the financial professional misrepresented his or her rank by using a generic statement claiming he or she is the top financial professional on the list where the members are not rank-ordered;
  • the financial professional omitted the geographic scope of an award, such as where the ranking is based on a small, regional area;
  • the financial professional included false or misleading information on the application for the award or designation that could call into question whether he or she validly received the award; and
  • the financial professional continues to use professional designations that have lapsed.

You should be cautious in evaluating a financial professional based on any professional awards, rankings or designations they may have.  There are some steps you can take to understand awards, rankings, and designations better.

  • Look for details and explanations of the award, ranking, or designation in the materials the financial professional has provided.  If there aren’t any details or explanations, ask the financial professional or perform your own research.

Keep in mind that the SEC does not endorse any professional award, ranking, or designation.

You should always look beyond a financial professional’s awards, rankings, or designations to determine whether he or she can provide the type of financial services or products you need.

Additional Information:

Investor Bulletin:  Top Tips for Selecting a Financial Professional

Investor Alert:  Beware of False or Exaggerated Credentials

Investor Bulletin:  Making Sense of Financial Professional Titles

Investor Bulletin:  “Senior” Specialists and Advisors:  What you Should Know About Professional Designations

NEP Risk Alert: The Most Frequent Advertising Rule Compliance Issues Identified in OCIE Examinations of Investment Advisers

 


The Office of Investor Education and Advocacy has provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

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You can check out the background of an investment professional by using Investor.gov.  It’s a great first step toward protecting your money.  Learn about an investment professional’s background, registration status, and more.  

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