January 17th, 2021

‘Adviser’ distinction raises alarm

By Dave Mabell on December 12, 2016.


If unqualified, unlicensed surgeons were allowed to operate on patients, Canadians would angrily call for an investigation. If unqualified people calling themselves lawyers were allowed to take cases to court, the response would likely be the same.

But a new report from the Small Investor Protection Association says 96 per cent of Canada’s “financial advisors” are evading provisions of their province’s securities legislation. They’re not registered as financial “advisers” offering impartial advice in their clients’ best interest.

With nearly 122,000 Canadian men and women registered to sell securities, the consumers’ organization says just 4,076 were legally registered (by September) as an “advising representative” or an “adviser.” That “e” is the legal distinction.

All the rest are simply sales “advisors,” the report says. They’re paid to sell the financial products their employer prefers.

“Seven out of 10 Canadians believe they are working with a financial expert with a legal obligation to look out for their best interests,” it points out.

But many are wrong, and the organization warns it can cost some Canadians half their life savings.

Unlike licensed doctors and lawyers, the association maintains, these sales agents have no fiduciary duty to act in the best interests of their clients.

“They can hide best advice, and the best products, from customers,” the report asserts.

“They can profit from the greater rewards of selling you substandard or higher-fee investments because they are salespersons, not professional advice givers with the agency duty and legal obligation to look out for your best interests.”

Lethbridge resident Larry Elford, who retired from the investment industry so he could warn the public about its practices, says no Lethbridge-area investment agents are registered as “advisers.”

“I have checked and there are currently none in Lethbridge area who possess the registration required to call themselves an ‘Adviser,’” he says.

That simple spelling variation, he says, allows them to remain outside the jurisdiction of Alberta’s securities legislation.

“But that is skirting the law (Section 100 on ‘Misrepresentation’ in the Alberta Securities Act).”

What’s worse, he suggests, neither the province’s securities officials nor the provincial government seem interested in increasing consumer protection for Albertans saving for their retirement. “The Alberta Securities Commission is on record of ignoring this violation of Alberta law,” Elford says — “in favour of paycheques as high as $700,000 to those at the top of this regulatory agency.”

And neither the New Democrats nor the Progressive Conservatives saw the need for change, he adds.

“I have spoken to Alberta finance ministers as far back as Shirley McClellan, right up to Joe Ceci of today’s government,” he says.

“Each one has simply taken the stance of not wanting the public to be made aware of these violations of law, as well as violations of Albertan’s financial security.”

Elford says that’s how the City of Lethbridge ended up buying $30 million worth of “toxic investment products.”

That ongoing confusion over the role of investment sales personnel, he says, “thrives every day much to the detriment of millions of working and saving Albertans.”

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[…] The term financial “adviser” vs. “advisor” can have great meaning. […]