According to a new paper from Derek Tharp, assistant professor of finance at the University of Southern Maine, clients equate advisors more closely with doctors or lawyers, while brokers are seen as similar to car dealers. As it turns out, titles alone make a big difference in how professionals are perceived by potential clients.
Last year, the Securities and Exchange Commission (SEC) almost banned brokers from referring to themselves as advisors/advisers unless they were also specifically registered as investment advisors with the regulator. However, the commision abandoned the plan. It seems, however, that this might have been helpful to both clients and financial professionals, as the choice in titles makes a big difference.
Tharp conducted a survey as part of his “Consumer Perceptions of Financial Advisory Titles and Implications for Title Regulation” paper for the Mercatus Center at George Mason University, which looked at consumers’ perceptions of financial professional titles and how they compare with other professional titles, such as doctor, lawyer, politician and car salesperson.
The survey showed that titles influence how consumers form expectations about the service level of financial professionals, and how a title may reflect the way clients look at their advisors and/or brokers.
The survey asked 665 individuals via Amazon’s Mechanical Turk crowd-sourcing website to rate 12 professional titles in terms of nine characteristics: honesty, intelligence, serving the interest of others, trustworthiness, helpfulness, depth, work ethic, success and caring.
To no one’s surprise, doctors were rated highest across the board. Lawyers scored second in intelligence, work ethic and success, but those old adages about lawyers being untrustworthy and dishonest made them score much lower in those categories. Car salesmen and politicians, meanwhile, scored poorly across the board.
When it came to titles of financial professionals, financial advisor scored the highest in intelligence. Brokers, meanwhile, scored the lowest when it came to honesty, serving the interest of others and caring.