The use of “advise” or “advise” is far from subjective as some articles on the subject might suggest. In fact, making a case for either spelling can send you into an endless dictionary rabbit hole. Either way, the favoritism of one stock over another seems to be confusing for investors.
Both titles have deep roots and have been used interchangeably for decades. Webster’s suggests that a counselor or counselor can be used, as both spellings define a person who engages in the act of counseling or offering recommendations. The Associated Press Style Guide, a true grammar tome for editors and writers, favors the “-er” version.
The one distinction most can agree on is that while “advise” is the preferred term, both spellings are correct, provided they are used consistently throughout a piece of content.
If “advisor” and “advisor” both mean the same thing, then what exactly is the problem with spelling in the financial services industry?
Whether the preferred title a financial professional uses today is “advisor” or “advisor,” the choice of spelling is steeped in history. In the distant past, financial professionals referred to themselves as “advisers,” but a wave of malpractice on the part of advisers – followed by regulatory changes in the 20th century – led to a massive migration of companies adopting the label. ” to advise “.
You see, in the 1920s, during the early days of mutual funds, investment funds were flagrantly abused. The funds were often created by “advisers” who dominated the boards of directors of these funds. Rather than increasing value, they put their own interests and those of their associates before investors. Thus, at this time, many financial professionals chose to call themselves “advisers” to distance themselves from the harmful actions of their “advisor” counterparts.
During the Great Depression, it became evident that a crackdown was needed to end the abuses that plagued this grave era. In response, the US Investment Advisors The 1940 law was passed – and while the law did a lot of good, its name contributed to the spelling conundrum we see today. A regulatory distinction was inadvertently created due to this choice of spelling. In the eyes of financial professionals, the spelling of “advisor” was more related to the regulatory act and regulation of financial services.
Another change happened naturally. The designation of governing bodies and verbiage enunciated in the Investment Advisers Act have come to characterize the adoption of the widely accepted legal and regulatory spelling of “advisor”. The law obliges financial professionals to register with a governing body. So someone who calls himself a “to advise”Could work for a registered investment To advise (RIA), or they can be an investment To advise Representative of a firm (IAR). Ultimately, if a professional provides ongoing investment advice for a fee, they are required to register as an “investment advisor,” whether their title or the name of the company they work for uses the term ” to advise “.
Applying this historical context, it is not surprising to see that the spelling “counselor” has been used much longer and may explain why it is the preferred spelling of many long established dictionaries and journalistic sources.
Outside of regulatory language, there are other driving forces that may have helped initiate the spelling change for what finance professionals choose to call themselves today. The adaptation “counselor” that has started to take off probably stems from the root of the word “counselor”. Professionals have gradually adopted the more impressive sounding “advisor” version as a way to inflate their importance as well as to distinguish themselves from the governing body of more regulatory advisers.
Over time, there also seems to be a change in public perception. An “advisor” is generally recognized as synonymous with professional. Although some professionals still prefer the -er version, the numbers have declined since the 1940 law. According to Google NGram Viewer (Figure 1), which is an indicator of the use of printed words, the use of “advisor” has exceeded the use of advisor since 2012.
Financial advisor vs financial advisor
Historical use of advisor versus advisor in print from 1920 to 2019
Source: Google Books Ngram Viewer
The Wall Street Crash of 1929 and the Great Depression that followed until 1939 provided the impetus for change in the financial services industry. It is not difficult to see why professionals might want to distance themselves from rogue “advisers” and their unscrupulous activities before the 1940 law. Since then, the change has been widely adopted, and it is now customary to do so. ” use spelling – related to a legal and governmental body and spelling – or related to practicing professionals.
While the Securities and Exchange Commission (SEC) hasn’t weighed in on any regulatory distinction between spellings, it does focus on a professional’s compliance with laws designed to protect investors. In particular, part of this regulation is to avoid misrepresentation.
The reality is that even though financial professionals have long been accused of rearranging spelling to inflate their importance, that sentiment would not pass the regulatory hurdle without the SEC establishing rules on such use.
When looking for a financial professional or browsing through a planning strategies feed, depending on the site you are looking for, the results may be different if you are looking for an “advisor” versus an “advisor”.
Regardless of the spelling that financial professionals use, you should expect to receive the same professional services that you are looking for. This is, after all, what is more important than a lesson in spelling.
Editor’s Note: Kiplinger’s Personal Finance adheres to the AP style rule by preferring “advise” to “advise”. We use the former in all cases, except for proper nouns.