Industry insiders lament damage to profession after IIROC bans former advisor
The banning of a former Calgary advisor, who was also fined $450,000, has left one industry insider “disgusted” and another lamenting the damage done to his profession’s reputation.
After an investigation lasting more than two years, Adam William Woodward, formerly a registered representative at the local branch of Richardson GMP, was permanently banned at a recent Investment Industry Regulatory Organization of Canada (IIROC) hearing.
Investigators looked into allegations that, among other accusations, he failed to ensure investment recommendations were suitable, engaged in unauthorized discretionary trading and engaged in personal financial dealings with clients. An IIROC statement said he lost clients, many of whom were seniors and vulnerable, a combined total of more than half a million dollars. He is no longer a registrant with an IIROC-regulated firm.
The details of exactly which allegations the IIROC penalised Woodward for have not yet been made public. Woodward has yet to comment.
The case comes hot on the heels of London investment advisor Anne Milne being fined $15,000 for failing to use due diligence in recommending leveraged ETFS (LETFs) to clients between November, 2009, and May, 2016.
Grant White, an investment advisor at National Bank Financial, says stories like these damage the industry’s reputation and simply can’t go on.
He said: “The problem is advisors keep shooting us all in the foot and we keep doing things that damage our respect level as a profession.
“That needs to stop. In my mind the ways to do that is, one, to increase the barriers of entry for new advisors coming in and, two, education of the general population. I think in some cases people are getting taken advantage of and they need to be able to make educated decisions about what they are doing financially and who they are working with, and who they trust.”
White believes the punishment meted out to Woodward is appropriate, providing authorities collect the fine, something he believes they need to improve upon.
He said: “It’s a big fine and think that should be a good deterrent but the problem is any time there is an industry where people can make good sums of money doing it you are going to attract some bad characters. I don’t know this guy so I can’t comment on him personally but it’s just the nature of the business.”
Christopher Dewdney, principal at Dewdney & Co, questioned how the advisor in question sleeps at night and said such conduct breaches the entire principle of trust advisors must have with their clients.
He said: “First of all, I’m disgusted. We, as advisors, have a very important responsibility to our clients. One of the things there is a big dispute about is whether we are true fiduciaries. In my opinion we have to be, it’s not a matter of should we be, we have to be.
“We are responsible for clients’ financial wellbeing; not so different as a doctor is for someone’s health. We shouldn’t take that responsibility lightly. So when you hear a story like that, my heart goes out to the individuals, the clients, but in terms of my feelings for the advisor, it’s that of disgust. He definitely should be reprimanded and he shouldn’t be practising in this industry.”
White believes the influx of new technology means there is now an alternative route for investors, so advisors have to up their game in terms of professionalism.
He said: “You have to walk the walk, talk the talk, look professional and you just have to exude that. I think we’ve done [the damage] to ourselves but I definitely think it is something that is going against the advisory business right now. I think it’s almost right to do so because there are people who are taking advantage of people. There are new solutions and other technologies coming out, so advisors have to do better.
“I’ve started to see some new stuff coming out and they are phenomenal. It gets back to showing your value and if you can’t be trusted, then you have real problem.”
While Dewdney maintained that people fleeing advisors for new fintech products is not in clients’ best interests, he warned that publicity around discredited professionals in the industry affects everyone and that it is up to the advisor to explain their designations.
He said: “Does it affect you? Yeah, you’re in a situation where you sit down with clients and they’ll bring it up. How do I know you are doing the right thing? How do I know that you’re being regulated and what’s in place? I think they are great questions and concerns, and I think it’s the responsibility of the advisor to explain the structure.”
Calgary investment advisor permanently banned
Advisor cost clients more than $100,000