Are most financial advisors just salespeople?

Are most financial advisors just salespeople?

Are most financial advisors just salespeople? Ninety-six percent of financial advisors in Canada are registered as commission salespeople, according to a new report from the Small Investment Protection Association (SIPA).

“[W]hen you check your Advisor's registration and see that they are indeed registered, the probability is very high that they are registered as dealing representative or in plain language a salesperson,” the group said in a statement.

“Although advertising suggests the industry will look after client's best interests, the shocking truth is the investment industry is using a majority of commission salespeople to convince investors to buy their financial products,” they continued.

The group’s pronouncements are based on months spent compiling data from provincial securities administrators regarding the registration of representatives. Some were registered as “portfolio manager” and “advising representative”; registrants operating under these designations are required to look after clients’ best interests.

However, “the majority of representatives [are] registered as [a] ‘dealing representative’ or salesperson,” according to SIPA. Those operating under this title are not required to protect clients’ interests. Furthermore, the group said, such individuals are motivated through a system of rewards and incentives to push products that maximize commissions.

By not using representatives’ registered classification and instead using the title “financial advisor,” SIPA said, the investment industry appear to be violating laws as stated in the provincial securities acts. They also criticized the registration check system currently in place, saying that it “should be more user-friendly to enable investors to quickly determine a representative's true registration category and qualifications.”


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4 Comments
  • Jamie 2016-12-16 5:27:07 PM
    You can always rate your Financial Advisor at: http://ratemyadvisor.org/
    Post a reply
  • Arthur C. Salzer, CFA 2017-01-18 10:03:48 PM
    The industry owes it to clients to correctly differentiate between salespeople and true fiduaciary advisors.
    Post a reply
  • Peter 2017-03-31 10:20:59 AM
    Whether you are an advisor or an adviser, commissioned or salaried, have numerous industry designations after your name or none, you either have the honesty and integrity to do what is in the best interests of your clients, or you don't. It is as simple as that!

    Either you are motivated by the fear of losing your job if you do not meet your quota, or by the greed for personal financial gain, or by always doing what is in the best interests of your clients.

    Every profession is trying to "sell" you to be their services. Every financial institution is trying to "sell" you their products and services. There is absolutely nothing wrong with "selling" as long as it is in the best interests of the client and you place your clients' needs ahead of your own.

    Post a reply