Bank clients baited using title trickery: SIPA

Bank clients baited using title trickery: SIPA

Bank clients baited using title trickery: SIPA 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.


Related stories:
Canadian banks to be investigated
Are most financial advisors just salespeople?
 
6 Comments
  • Annoyed IA 2017-03-31 10:17:01 AM
    Larry Elford is a disgruntled ex broker that sued his former form a LOST! There is absolutely no solid proof that the terms Advisor and Adviser mean anything differently in Canada. The fact that Canada's Self Regulating Organizations (SRO) are insignificant governing bodies does not mean Canadian investment firms have been "misleading" the investing public. With any type of investing strategy, investors need to be made aware of the risks and pitfalls of such strategies. I myself have the title Advisor which is a term chosen by the firm I am employed with. Try to search the term "Adviser" on the IIROC site, and it's nowhere to be found.
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  • Daniel Collison 2017-03-31 11:28:48 AM
    Most financial advisors/advisers would be happy and willing to take on a fiduciary obligation to their clients as most advisors/advisers already have their clients' best interest at heart . . . that's how they stay in business!!! This wide-brush painting of advisors as hucksters is nonsense and the government and regulators need to do what they're supposed to do: set rules and regulations around the terminology, titles and requisite services of advisors. Simple!
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  • AnotherAdvisOr 2017-04-01 1:22:24 AM
    There is a world of difference between a "Financial Advisor" at a bank branch and an Investment Advisor with an investment dealer. I know, because I've held both titles.

    What Larry and SIPA also fail to accept is that there is a world of difference between regulation in the U.S. and Canada. In the U.S. any reasonably qualified individual can register as a Registered Investment Adviser (a fiduciary). In Canada, the "Advising Representative" registration is far more difficult to attain, requiring years of portfolio managing experience and/or a CFA designation. This is simply not comparable.

    The original CBC article discussed "Vice President" titles on IA business cards and some clients who felt duped because they thought they were being advised by actual bank executives. VP titles are truly a dupe and something our industry MUST do away with as soon as possible.
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