In general, if you are a retail investor who is purchasing securities (stocks, bonds, mutual funds, ETFs, etc.), the person selling and advising you on the investment product must be registered.
Why is Registration Important?
Registration helps protect you because securities regulators will only register individuals and firms if they are properly qualified and comply with investor protection laws. Working with a registered investment advisor is the only way to ensure the laws governing investment advisor conduct can protect you. If you make the mistake of allowing an unregistered person to advise you about your investments, you forego the protection of those laws.
Learn how to do a registration and background check by visiting the Advisor Check section.
Registered Investment Advisors
There are different categories of registration, each allowing people and firms to sell and advise on different investment products. For example, a person registered as a representative of a mutual fund dealer can only sell and provide advice on mutual funds, unless the person is also registered in another category. A person registered as a representative of an investment firm may sell and advise on a much broader range of investment products. Be sure to choose an investment advisor who is registered to sell the types of investment products you want to invest in.
If your investment advisor’s firm is a member of the Mutual Fund Dealers Association (MFDA) or the Investment Industry Regulatory Organization of Canada (IIROC), your account will be covered by an investor protection fund (CIPF or MFDA IPC) up to certain limits, only if the firm becomes insolvent.
You can turn to other professionals – lawyers, accountants, insurance agents, and financial planners – for their expertise in various areas of personal finance. Generally, unless they are registered with a securities regulator, they cannot give advice on investments in specific securities. People who sell insurance products, like segregated funds, need to be licensed.
Financial Industry Designations & Titles
Whether you’re choosing an investment advisor for the first time or thinking about changing advisors, you’ll find a variety of titles and designations in the industry. Before choosing an investment advisor, be sure you understand the letters on their business card and how they can help you reach your financial goals.