Question: What does a broker, investment advisor, financial consultant, financial advisor, investment manager, financial analyst, portfolio manager, and generic financial planner have in common?

The answer maybe nothing, or maybe everything.

The results of the devastating survey conducted by Weiss Rating Service www.weissrating.com a few weeks ago, have raised a few eyebrows. In that survey, investors were asked, "How likely are you to seek investment advice from a stockbroker?" An overwhelming 83 percent indicated it was definitely unlikely that they would get advice from a broker, with a further 52 percent saying it was HIGHLY UNLIKELY that they would work with a broker.

Global investment houses have known for some time, probably since the beginning of 2000 that the word broker in the public eye may be synonymous with untrustworthy, and have been distancing themselves in the media and through advertising ever since. Use of the description financial advisor, consultant, investment consultant and all sort of variations on these names only further distort the ethical credentials of a real investment professional. Who was it who said 'a thorn by any other name is still a thorn?' or ' was it a rose.....?

So, let's try to separate the wheat from the chaff.

Generally, in the United States, every individual who deals with securities and the investing public either by selling investment products, or investment advice must be licensed by the NASD ( as a broker) - NASD Series 7 or other NASD licensed areas such as principals, commodities, etc. That means brokers, planners, portfolio managers, insurance agents, financial analysts, whatever you call yourselves, it is quite simple, no licence, no advisor status, period. This is enforced by requiring firms to report on licensed personnel entering and leaving a firm, and the holding of licensed personnel fingerprints on file at the Federal Bureau of Investigation.

There are other circumstances for smaller firms where they report to the US SEC as Registered Investment Advisors. In addition, yes, some banking functions and insurance companies are exempt from the rule. Overall, there is a strict investing standard by which investment personnel are measured.

The same sets of standards are applied in Canada and the UK and elsewhere. Securities regulations in the United Kingdom are particularly strict and onerous, with there being a distinction made even between the type of financial advisor, one that sells proprietary products and one that provides independent advice.

Looking at the investment environment in Bermuda, there are investment employees here from all over the map, and unfortunately, there is no universal Bermuda investment credential denoting a licensed broker/advisor. While local residents can sit for the US NASD exam at the Bermuda Stock Exchange, currently, there may be about 15 success stories. Furthermore, the standard under the Bermuda Investment Business Act 1998 for employing investment personnel is ambiguous. It merely states that the 'advisor' should be 'suitably qualified,' and rather than holding the individual advisor to that vague standard, the Act holds the Bermuda licensed investment firm responsible for deciding who of their firm's personnel is 'suitably qualified' to act as an investment advisor with the general public.

Because the investment world is so complex, and because professionals are not only held to high standards, but also want to differentiate themselves from the pack, so to speak, you will also see many investment advisors acquiring other significantly more comprehensive licences. The most common among them today and also the ones seeing the highest growth rates are, Chartered Financial Analyst and Certified Financial Planner(tm) practitioner. Both of these licenses require serious commitment over a three-year period, in contrast to a Series 7 broker licence, which only requires basic investment knowledge, and a four-month probationary period before the individual is allowed to invest clients' money and provide investment advice, which in a pure brokerage sense is supposed to 'incidental to investing the brokerage account."

A Charter Financial Analyst - this is a global credential - candidate must pass three levels of exams, one per year; receive three years work experience as a portfolio manager under a (licensed) CFA charterholder; adhere to a global code of ethics and conduct; and have a university education. A CFA charterholder or a candidate will almost always be required to pass a Series 7 or other country equivalent securities license.

A Certified Financial Planner(tm) candidate must pass five levels of an extensive CFP education exam preparatory course, which usually takes two or three years; pass a national standardised ten-hour two day exam; receive three years work experience as a generic financial planner under a licensed CFP(r) practitioner; adhere to and pass a code of ethics and conduct exam; and have a university education (mandatory in 2005). A CFP(r) practitioner will almost always be required to pass a Series 7 or other country equivalent securities license.

Remarks are made to me every week by small investors questioning the state of their investments and asking me if I understand what their advisor is doing. The answer is that I have no idea, nor am I going to second guess - but if you have concerns about your investments (and the person handling them), you had better start asking some questions. And the first one might be, "show me in writing your qualifications to be an investment advisor." Hopefully, you will be pleasantly surprised to see that your advisor is completely qualified, but never got around to hanging his/her credentials on the wall. You may also find out that your advisor and/or planner has none of the qualifications or licences listed above, just a very nice sounding title.

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Martha Harris Myron CPA CFP(tm) is a Bermudian, a Certified Financial Planner(tm)(US license) practitioner and VP and Manager, Personal Financial Services, Bank of Bermuda. She holds a NASD Series 7 license, is a former US tax practitioner, and is the winner 2001-The Bermudian Magazine - Best of Bermuda Gold Award for Investment Advice. Confidential Email can be directed to marthamyronnorthrock.bm

lThe article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda.

Under no circumstances is this advice to be taken as a recommendation to buy or sell investment products or as a promotion for financial plans. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.