Beltway org changes name to underline differences between advisors and brokers. The Investment Counsel Association of America (ICAA) is now the Investment Adviser Association (IAA). The name-change is intended “to better reflect [the IAA’s] mission to serve the business and regulatory needs of investment adviser firms and represent the industry to regulators,” says the Washington, D.C.-based association of registered investment advisors (RIAs).

“Although our diverse membership represents the full spectrum of investment adviser firms, all of them share one core trait -- they are registered and regulated under the ‘Investment Advisers Act of 1940,’” says Blake Moore, president of the IAA and CEO of Allianz Global Investors, U.S. Retail. “By adopting the Act’s terminology, we are highlighting the uniqueness of the investment [advisor] profession and distinguishing ourselves from financial services industries that are regulated under other laws.”

The “Act’s terminology” dictated the choice of a new name right down to the spelling of “adviser,” notes IAA executive director David Tittsworth. “There was a lot of discussion about that,” he says. “The tie-breaker for us in every instance was to go with the language of the Act” – which indeed opts for an "-er" ending. In the years since 1940, the “-or” ending has become standard in the U.S.; the “-er” ending holds sway in the U.K.

More substantively, the name-change grew out of a desire to help clear up popular confusion around the roles and responsibilities of various types of private investment advisors. “Nobody really understands the difference between a financial advisor and a financial planner,” he says. “And fewer still get what ‘investment counsel’ means – it’s not widely used, recognized or understood.”

The name-change comes about two weeks after the Securities and Exchange Commission (SEC) decided to keep exempting fee-based brokers, who are governed by the Securities Exchange Act of 1934, from the fiduciary standards financial advisors have to follow. Though not a direct reaction to that decision, Tittsworth says the name-change reflects IAA board’s and general membership’s desire to “distinguish [themselves] from brokers, who are governed by different laws and do different things.”

In part, that difference comes down to financial advisors – or “advisers” if you like – having “a duty of utmost loyalty to the interests of the client,” says Tittsworth. Brokers have a less stringent “duty of suitability” that governs their investment recommendations to clients, he says.

But some brokerages argue that the disclosure rules governing brokers’ activities “may be more effective at informing clients of relevant issues than those provided by regulations applicable to advisers,” as Morgan Stanley’s chief counsel Georgia Bullitt puts it in a recent letter to the SEC.

The IAA provides a variety of advocacy, educational, and business services for about 400 advisory firms. Its membership collectively manages around $5 trillion for individual and institutional clients. Altogether, RIAs manage more than $20 trillion in private and institutional assets, according to SEC data. –FWR