In the wake of recent revelations against Canada’s five biggest banks, clients have expressed outrage over reportedly dubious and misleading sales practices. They supposedly fell for such tactics largely because they were in the hands of “advisors” — a title which, according to one advocacy group, carries no professional weight.
A recent report issued by the Small Investor Protection Association (SIPA) showed that the vast majority of the registered financial professionals in Canada are listed as dealing representatives, according to CBC News
. Dealing representatives, they say, are just salespeople qualified to sell financial investment products; among all the 121,000 financial professionals in Canada, only 4,000 have a fiduciary duty.
“The game today is to earn clients' trust,” Larry Elford, former certified investment manager at RBC and lead researcher behind the SIPA report, told CBC News
. “And never let them know that you are actually a commissioned salesperson and you don't have to honour that trust.”
He said a common dodge employed by the banking industry is the use of the term “financial advisor.” “Advisor” is an unregulated title that can be assigned to anyone, but the title “adviser” is reserved for those with an actual fiduciary responsibility.
“Advisors can sell you the third, fourth, fifth or least beneficial product to you” if they want more commissions or are under pressure to push a house product, Elford told the publication.
The Ontario Securities Commission
has confirmed that under securities law, “adviser” describes an entity licensed to give securities-related advice, and “advisor” is not. The Canadian Securities Administrators also confirmed to CBC News
via email that it does not regulate most titles used by financial industry employees.
Many of the employees and former bank workers who have spoken out said they were pressured to act like salespeople to hit targets and push products. One former financial advisor at TD reported being “thrown into” his role with “zero training.”
Another wallpaper title, “client advisor,” is allegedly being used by RBC to refer to tellers. “How do you expect a 20-year-old employee who's getting paid $12 an hour to provide advice with the title 'client advisor,' when they're really just equipped to sell?” an unnamed RBC branch manager said to CBC News
“I've talked to hundreds and hundreds of people who've been victimized,” said SIPA Founder Stan Buell. “And every one trusted their advisor.”
Buell said he doubted big banks assigned any actual advisers to handle clients’ accounts, adding that self-regulation has not been very effective at keeping financial institutions trustworthy. “It must be an outside agency … [empowered] to handle complaints, to investigate and authorize, and even pay restitution for the victims of the financial institutions,” he said.
Canadian banks to be investigated
Are most financial advisors just salespeople?