The North American Securities Administrators Association (NASAA) has officially amended its model rule on dishonest or unethical business practices to prohibit broker-dealers and agents from using the titles "advisor" or "adviser" unless they hold the appropriate registration. The change is designed to curb investor confusion and bring state-level regulation into closer alignment with the SEC's Regulation Best Interest (Reg BI).

InvestmentNews reports that the amendment to NASAA's Conduct Rule directly targets firms and individuals who present themselves as trusted fiduciaries without being registered investment advisers. NASAA emphasized that the misuse of these titles can mislead investors into believing they are receiving fiduciary-level advice when they are not. By enforcing stricter title usage, NASAA aims to reduce the blurred lines between broker-dealer and investment adviser roles.

The updated rule also incorporates Reg BI's best interest duty of care standards, reinforcing protections for retail investors. When NASAA proposed the amendment in November 2024, it cited a 2021 study revealing that 7 percent of firms under Reg BI were improperly using the term "adviser." The association's decision comes amid broader industry concerns over how FINRA enforces Reg BI and how effectively the regulation protects retail investors.

According to InvestmentNews, the misuse of titles has been a growing issue since the SEC adopted Reg BI in 2019. Under the rule, brokers who are not also registered investment advisers may not describe themselves using adviser-related titles. Despite this, some broker-dealer firms continued marketing their services under the "advisor" label while steering clients into brokerage accounts rather than advisory relationships.

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