Dealers must be held accountable, says former broker

Dealers must be held accountable, says former broker

Dealers must be held accountable, says former broker Rarely does IIROC or the MFDA punish anyone outside of offending financial advisors and as a result clients and investors aren’t getting the justice they sorely deserve, argues one retired veteran of the industry.
“Regulators need to concentrate more on dealers than on individuals as regards sanctioning,” a career advisor told WP speaking on condition of anonymity. “Even the mob engaged in pillage and murder is not the disorganized group it appears to be. Somewhere behind the violence is a leader whose ideas the mob is simply putting into effect.”

Accountability for advisor transgressions according to the former advisor must flow from the top down. Leadership should be held accountable for the actions of a few bad apples as it is the people in charge who are making the decisions about what does or doesn’t happen at a dealer.

Earlier in September, WP reported on an Alberta situation in which a branch manager and the dealer agreed to a settlement with IIROC in a situation where the advisor seriously churned the accounts of four clients who were retired or near retirement. It was a rare example of leadership also walking the plank.

That kind of accountability is reminiscent of Napoleon Bonaparte in battle, says the retired advisor.

“Several officers complained bitterly about the poor quality of soldiers. They pointed out this was the reason they had not reached some of their objectives,” wrote the retired advisor. “The discussion halted, however, when Napoleon quietly said, ‘Gentlemen, there are no bad soldiers, only bad officers’. In that brief statement the little general underscored the importance of good leadership.”

Following on this observation, the retired advisor points out that good dealers don’t blame advisors for the shortcomings of the firm but rather take it upon themselves to fix whatever is lacking in their compliance process.

“If regulators started holding dealers responsible for the action of its ‘soldiers’, you'd soon see a whole new culture take hold among the troops,” said the advisor. “Caveat Emptor would no longer be the words to describe today's rep-client relationship. The tone of compliance starts at the top.”

See more: IIROC punishes dealer and branch manager in rare case