advisor fraud, professionals, or salespeople masquerading?

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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Fri Nov 04, 2011 5:45 pm

11-0306 November 2, 2011
IIROC is pleased to present the Annual Consolidated Compliance Report for 2011 to assist member firms in their compliance efforts and in meeting regulatory expectations. This Guidance Note outlines a number of current issues requiring firm attention and some general and specific examination deficiencies from the IIROC compliance examination teams (Financial and Operations Compliance, Business Conduct Compliance and Trading Conduct Compliance).

Use of Titles and Designations Survey
IIROC has undertaken a targeted survey regarding the use of titles, designations and other descriptors by Registered Representatives, Investment Representatives and other employees of Dealer Member firms who deal with investors.
The unsupervised use of certain titles and designations such as “Financial Planner”, “Retirement Specialist” or “Senior Advisor” are intended to convey an impression of an advisor’s education, experience, proficiencies, and/or other credentials. The use of such titles and credentials is intended to invite client trust and reliance and may be used by clients as a basis for comparing and distinguishing between advisors expertise and professional qualifications. It is, therefore, important that there be appropriate rigor, consistency and controls around the use of titles.
The objective in undertaking this survey is to gain a better understanding of:
• the internal firm policies and procedures relating to the use of titles, designations and other descriptors by advisors and other employees in their dealings with investors;
IIROC Notice 11-0306 – Rules Notice – Guidance Note – Annual Consolidated Compliance Report 8
• the internal approval process of Dealer Members relating to the use of such titles and designations and other descriptors;
• any prerequisite training and proficiency requirements imposed internally by Dealer Members before particular titles and designations may be used by a firm’s advisors and other employees dealing with investors;
• the internal audit process in place at Dealer Members to ensure that a firm’s policies and procedures in this area are being adhered to at the firm and its branches;
• the range of titles, designations and other descriptors currently used by advisors and other employees within Dealer Members who deal with investors; and
• investor complaints received by Dealer Members relating to the use of titles and designations.
Based on IIROC staff analysis of the information obtained through the survey, IIROC will determine the appropriate follow-up action.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Sat Oct 29, 2011 2:27 pm

"Most consumers are aware of the fact that stock brokers are paid by earning commission on the products they sell to their clients. In an effort to bring more credibility and consumer trust to its sales team, brokers now use titles such as ‘financial advisors,’ ‘wealth managers’ and ‘financial planners’ when titling their team members. Unwary consumers often confuse these salespeople with Registered Investment Advisors (RIAs). What’s the difference?"

from an american article found at: http://www.thefinancialcoach.com/protec ... les-people

Protecting Yourself From Financial Sales People
Written by Bryan
Categories: Future Planning, Investment Advice


The Wikipedia definition of a financial planner reads as follows:
“A financial planner is a practicing professional who creates a financial plan; a detailed strategy tailored to a client’s specific situation, for meeting a client’s specific goals. He considers all questions, information and advice as it impacts and is impacted by the entire financial and life situation of the client. His objective is to create the greatest probability that all financial goals (anything requiring both money and planning to achieve) are accomplished by a target date.”
The definition above paints the picture of an advisor that can be completely trusted to work in the best interest of his or her client, helping them to make the most educated, financially sound decisions to reach their retirement goals. Wouldn’t the world be a wonderful place if this definition was accurate? Unfortunately it is not. In fact, today’s financial marketplace is riddled with confusion, beginning with the acceptable terminology used to title a ‘financial planner’ all the way down to the often misleading information that uneducated planners are fed by their brokerage firms. Let’s break this down…
Today’s Financial Planners
Most consumers are aware of the fact that stock brokers are paid by earning commission on the products they sell to their clients. In an effort to bring more credibility and consumer trust to its sales team, brokers now use titles such as ‘financial advisors,’ ‘wealth managers’ and ‘financial planners’ when titling their team members. Unwary consumers often confuse these salespeople with Registered Investment Advisors (RIAs). What’s the difference? In simplest terms, financial planners or advisors employed through brokerage firms are not required to have the best interest of their client as their primary goal. Instead, they have their broker-dealers interests as their first priority.
A report released through the Paladin Registry, an independent organization that rates the credibility of financial advisors, revealed that financial advisors regularly withhold vital information 85% of the time in order to sell certain products to the client. That is a staggering percentage of individuals who are being influenced in an area that can affect the outcome of their entire life savings. What can you do to protect yourself? The first step, of course, is to educate yourself. In order to help you with this, we’ve listed the most common examples of misrepresentation in the industry:
Credentials – As we mentioned above, financial product salespeople who want to appear more trustworthy will adopt titles such as, financial advisors, wealth managers, or investment planners. Regardless of the title, the way to protect yourself is by only seeking financial advice through a Registered Investment Advisor (RIA). Registered Investment Advisors are required, by law, to place the interests of the client above all else. Any other title should be discounted.
Experience and Competence – Inexperienced advisors may not intentionally provide you with inaccurate investment information, but without a solid foundation in the industry, an inexperienced financial advisor will only have the information fed to them by the brokerage firm they are employed with. This, of course, will lead to blindly pushing products that are not in the best interest of the consumer.
Be aware that there are no educational requirements to work in the financial service industry. Brokerage firms often hire very personable, charismatic individuals, and even resort to hiring older representatives, so they have the outward appearance of being experienced and knowledgeable. These are salespeople, period. Don’t trust your retirement savings and financial future to anyone without proper credentials. Always question the competence of an advisor.
Compensation Disclosure – Financial salespeople don’t want you to know how much they make by making certain investment recommendations, and you’ll never find out unless you specifically ask for it. Print out a copy of our Full Disclosure and Transparency Fee Chart to present to your potential financial advisor. You have a right to know how and ‘how much’ your advisor is being compensated.
Verbal Agreements and Presentations – An unscrupulous financial planner isn’t going to want you to know how vital written documentation is for protecting your financial interests. Financial salespeople will hope to win you over by building a rapport, using compelling sales literature, and making convincing verbal sales presentations. Without written documentation, it is easy to deny what was promised during a high-energy, motivating presentation. Fiduciary advisors (such as RIAs) use Investment Policy Statements to ensure that the client and advisor are aligned on the strategy and implementation of investments.
So, bottom line here? Know who you are dealing with and be aware that many financial advisors are simply product salespeople. The fact that this breed of salespeople deal with situations and information that can adversely affect the entire outcome of your life investments often makes no difference to them. It is your responsibility, as a wise investor, to understand what you are getting into when engaging the services of a financial professional.

(Holy Crackers Batman, we are being robbed!!)
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Mon Oct 24, 2011 7:37 pm

".......if we sell a DSC fund, we should be in jail"

http://www.financialpost.com/news/Plann ... story.html

Planners should make plans

Jonathan Chevreau, Financial Post · Oct. 22, 2011 | Last Updated: Oct. 22, 2011 5:06 AM ET

Aconsiderable majority - 61% - of Canadians aged 45 to 64 don't have a formal financial plan in place, according to a TD Waterhouse poll released this week.

When I see industry surveys like that, I assume the fault lies with the individuals rather than their advisors. After all, when asked why they don't have a plan, 50% told TD they "just haven't gotten around to creating one."

But after attending this week's Vision 2020 symposium - hosted by the guardians of the certified financial planner designation - I was surprised to hear that even CFPs don't routinely create comprehensive plans for their clients.

Early in Wednesday's event sponsored by the Financial Planning Standards Council, the moderator posed a simple question to four panelists: "Does every client get a financial plan?"

"No," replied Stephen Ison, a principal at Edward Jones. "The majority of our advisors are still evolving to seeing this thing as an objective, along with the changing desires of clients."

"No, not everyone gets a robust financial plan," said CFP Jason Round of Royal Bank of Canada. "My sense is not every client needs one but all get a form of advice tailored to them."

"Not everyone gets a financial plan," said Kim Thompson, senior vice-president of Credential Financial Inc. The initial focus is on understanding client needs, which may eventually lead to a "full financial plan depending on needs, complexity and investable assets."

The fourth was a consultant to various financial institutions. "There are lots of ways to define what constitutes a financial plan," said Amy Young, principal with Upside Consulting Group Inc. Different terms describe the process and there are a "wide range of outputs from asking for a financial planning exercise."

Typically, she sees documents with cover pages showing a client's name in big letters and the words "Your financial plan." But inside, the document is simply an assetallocation recommendation with no indication of goals, timelines "or even risk profiling. That concerns me."

Consumers seldom know the difference. "If the document says 'Your financial plan' on the front, they think it's covered. The technical quality of the financial plan can be quite poor ... I'd argue they haven't gotten what they need."

Regarding inflated job titles, Young said "consumers know the title financial planner is a euphemism for investment salesperson. The research shows it clearly." She suggested there may be room for a maverick firm to promote a straightforward title like investment salesperson. "Consumers are skeptical of the services they get from banks because they know these people are ultimately salespeople."

While the goal of FPSC president Cary List is to make financial planning a proper "profession," one panelist thought this unlikely as long as practitioners keep calling themselves an "industry," as indeed most did throughout the day.

The second panel highlighted this aspiration, with three experts outside the industry describing how professions like law, accounting and physiotherapy managed the transition. But the day's closing panel - on compensation structures under a professional model - revealed how far the industry has to go.

Despite the best efforts of Financial Consumer Agency of Canada commissioner Ursula Menke, three industry panelists stubbornly refused to acknowledge the inherent conflicts of interest that still abound in the dominant commission-based model. (For example, in mutual fund trailer commissions.) The closest was when IPC executive vice president John Novachis admitted that "for an account with $2million, if we sell a DSC mutual fund we should be put in jail."

But panelists felt smaller accounts of $25,000 are wellserved by the present model. To the frustration of some CFPs in the audience, there was scant agreement an entirely fee-based (or fee-only) industry could fly, despite the dismantling of commissionbased compensation structures in the U.K. and Australia. (There are a few hundred true fee-only planners in Canada but 17,500 CFPs.)

In a regulatory panel, FAIR Canada's Ermanno Pascutto said it started the discussion on a fiduciary duty of care because it's been raised in the United States, Australia and the U.K. But the focus here has shifted to acting in the best interests of clients. To enact a true fiduciary standard would require legislation in 13 jurisdictions, he said. "Since it took 10 years to create the two-page Fund Facts, it will take two decades for fiduciary duty."

If that occurs, the industry will certainly be viewed as a true profession. But it would be a lot closer once all CFPs can confidently declare ALL clients routinely get comprehensive financial plans.

jchevreau@nationalpost.com

(advocate comments......re the " if we sell a DSC mutual fund we should be put in jail." comment. It matters not what amount the sale is for. What matters is that the DSC is NOT in the better interests of the client, since there are cheaper alternatives. Sooooo, if someone calling themselves an "advisor" has sold you DSC funds, GET YOUR MONEY BACK. They have lied to you. They were never an advisor, they were licensed as something else, and they did not give you advice as they promised with lie #1, they took advantage of you for the biggest commission.) see http://www.investoradvocates.ca/viewtopic.php?f=1&t=173
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Mon Oct 24, 2011 12:57 pm

"an investor is unable to clearly distinguish between a product distributor and a financial advisor."

http://www.thehindubusinessline.com/fea ... 562522.ece

SEBI concept paper on investment advisors: How investors can be protected

RAJESH SALUJA

An investor-friendly Web portal can be set up so that errant advisors cannot easily slip through the cracks and resurface at a different institution.

Investors have lost trust in financial markets today not just because of state of the global economy but also because the trust they had placed in their personal financial advisor has been broken.

Globally, the Madoff scandal started this expose of errant advisors.

The Rs 300-crore Citibank fraud brought the issue closer home in India and galvanised various regulatory bodies to look closely at the fledgling wealth management industry.

Unfortunately, the industry despite being regulated by multiple regulators including the Securities and Exchange Board of India, the Reserve Bank of India, the Insurance Regulatory and Development Authoruity and the Pension Fund Regulatory and Development Authority has not had a cohesive oversight body.

As a culmination of the various discussions held this year between the market participants and the regulators, a self-regulatory organisation is being proposed as an overseer of the wealth management industry by SEBI in a recent concept paper. SEBI is taking the onus for formalising regulations and coordinating with the other regulators.

For an investor to trust him, an advisor needs to be transparent in his dealings. Today quite a few financial advisors have moved to a fee-based advisory model from a model based on compensation by product distribution commissions.

But some institutions who claim to follow the former, in their quest to increase their asset base, have minimised the asset-based fees they earn from a client to as low as zero per cent, but retain all the product distribution commissions.

As per SEBI's concept paper released at the end of September, those who receive remuneration from the manufacturer will be called ‘agents' and only those who receive all their compensation from investors will be called ‘advisors'.

This definition can cause further upheavals for retail investors in mutual funds, as fund houses do rely on IFAs (Independent Financial Advisors) to market products. Most of these IFAs are compensated by commissions since clients are reluctant to pay for advice.

ALIGNING INVESTOR INTERESTS

Under this suggested model, price-sensitive non-metro customers may find fewer independent advisors to service them.

To truly align a client's interest with the advisor, the fees for services should only be a percentage of assets as SEBI's recommendation, but with full credit given to clients for all product commissions earned. This would be a fully transparent model if the client's cost is capped.

This aligns an advisor's interest with the client's and minimises asset recommendations based on maximising earnings from product commission. It also makes sure product recommendations are based on a client's risk profile and appetite to withstand market volatility. Recommendations to an investor by an advisor should be based on prudent guidelines where investments are not only diversified across asset classes, but also across asset management companies (AMCs).

ACCREDITATION

Minimal qualifying education requirements, continuing education requirements, accreditation and registration with the regulatory body will root out the unqualified entities and persons from calling themselves advisors.

This should allow a central agency to track the movement of individual advisors across various institutions and will help clients in obtaining an advisor's background, qualifications and track record.

This can be achieved through an investor-friendly Web portal. Errant advisors cannot easily slip through the cracks and resurface at a different institution and continue their wayward ways. Institutions will also be held responsible for monitoring and maintaining records of all client transactions for a reasonable length of time.

SEBI's proposal also includes a clause for grandfathering in advisors who don't have the relevant educational background.

This clause needs to be carefully articulated and enforced since the experience of a person in narrow product sales function may not be comprehensive to enable them to perform the functions of a true advisor.

EDUCATING INVESTORS

Above all these, the key to safeguarding an investor's interest is investor education (awareness). Financial jargon needs to be simplified and investor awareness campaigns held to educate investors about the basics of finance.

It is strange to think an investor who spends at least a few minutes carefully picking a kilo of tomatoes which cost Rs 10 does not think twice before investing in the market.

When investors are asked about this discrepancy, it becomes apparent that their actions are governed by their lack of understanding of the investment and blind faith in their advisor. This makes the role of a financial advisor even more critical.

Many a times a client is reluctant to ask questions thinking it may be a basic question and it will reveal his ignorance, but all of us are not experts in all walks of life.

As one does not hesitate to ask a medical doctor basic questions when one goes for a health diagnosis, one should not hesitate to ask questions to a financial doctor when diagnosis and recommendation are made.

ADVISOR OR AGENT?

A number of today's issues arise from the fact that an investor is unable to clearly distinguish between a product distributor and a financial advisor.

A financial advisor looks at the overall financial picture of a client, including, all assets, liabilities and goals and develops a plan to help the client achieve his objectives. In this process, an advisor spends time not only understanding the investment risk profile but also the financial risk a client can take given the personal circumstances.

No two plans are alike and no two solutions identical but solutions are customised to suit each client's need. A product on a standalone basis may be considered a great investment choice, but given a client's personal circumstance it could be considered poison.

This ability and willingness to make the distinction and act in a client's best interest is what truly distinguishes a product distributor from a financial advisor.

(The author is CEO and MD, ASK Wealth Advisors. The views are personal)
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Mon Aug 29, 2011 8:06 am

INVESTMENT NEWS
http://www.investmentnews.com/article/2 ... sueAlert01
Fiduciary standard gets powerful advocate

By Mark Schoeff Jr.
August 28, 2011 6:01 am ET
As the federal government prepares to issue rules regarding investment advice, industry professionals and scholars have launched a nonprofit organization to promote the fiduciary standard.


The Institute for the Fiduciary Standard will advocate the broad adoption of regulations requiring that investment guidance be based on the best interests of clients and that financial advisers disclose all material conflicts of interest.

Investment advisers currently have to meet that bar, while broker-dealers adhere to a less stringent suitability standard that requires them only to recommend those financial products that satisfy a client's investment needs.

Under authority of the Dodd-Frank financial reform law, the Securities and Exchange Commission said that it intends to propose a rule this fall that would impose a universal fiduciary duty on anyone providing retail investment advice.

The Labor Department has proposed a rule that would significantly expand the number of fiduciary advisers to retirement savings plans. The agency said that it is still on track to issue a final regulation by the end of the year.

“These next four to eight months are absolutely critical,” said Knut Rostad, president and a founding member of the Institute for the Fiduciary Standard.

The group will meet with SEC and Labor Department officials, as well as members of Congress and their staff members, over the next several weeks. It has scheduled a Capitol Hill panel discussion Sept. 9 focusing on disclosure rules.

In addition to Mr. Rostad, compliance and regulatory officer at Rembert Pendleton Jackson, the organization's founders are Marion Asnes and James Patrick of Envestnet Inc.; Philip Chao of Chao & Co.; Maria Elena Lagomasino, chief executive of GenSpring Family Offices LLC; Kathleen McBride of the Institute for Private Investors; and Michael Zeuner, also of GenSpring Family Offices.

The group has broken away from the Committee for the Fiduciary Standard, of which Mr. Rostad was chairman. That group now will be headed by Harold Evensky, president of Evensky & Katz LLC.

Mr. Rostad said that he and the other founders of the Institute for the Fiduciary Standard felt the need to establish a permanent organization that would go beyond advocating for fiduciary principles within the context of Dodd-Frank and Labor Department rule making.

“Misunderstandings abound about what "fiduciary' means,” he said in a statement. “The institute provides a permanent platform to build a full program of advocacy and education on this important public issue.”

This summer, the Securities Industry and Financial Markets Association sent a letter to the SEC urging the commission to develop a new fiduciary standard that would be applied on an “account-by-account basis” and be spelled out in an agreement at the start of an adviser-customer relationship.

“The framework is a mixed bag,” Mr. Rostad said. “There are some encouraging parts and other parts that raise serious questions.”

Fiduciary skeptics, such as the National Association for Insurance and Financial Advisors, warn that imposing a universal standard would undermine the broker-dealer business model and increase regulatory and compliance costs that could price middle-income investors out of the advice market.

But the institute will argue this fall that fiduciary protection is required to restore trust to the advice business.

“There is a tremendous need to help investors understand the sharp differences between fiduciary advisers and sales professionals,” Ms. Lagomasino said in a statement.

mschoeff@investmentnews.com

advocate comment:

images.jpeg
images.jpeg (3.89 KiB) Viewed 10300 times

National Association for Insurance and Financial Advisors should be ashamed (or prosecuted for fraud) for hiding their salespeople behind the facade of a professional advisor.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Wed Aug 24, 2011 11:56 pm

Will the true wealth managers please stand up?
I
NVESTMENT NEWS http://www.investmentnews.com/article/2 ... e=20110824
August 24, 2011
19,400,000: The total number of results you'll get when you Google the term "wealth management.

The term likely now means very little to the average investor, with advisers, brokers, money managers and banks all using the phrase pretty loosely, to say the least. In most cases, it's more of an aspirational marketing tactic than an accurate description of a firm's real business and clientele.

But InvestmentNews, along with sister publication Pensions & Investments, sought out to measure at least one part of the wealth management universe, and determine which firms manage the most money for the truly wealthy.

By tapping into P&I's Research Center and survey of over 700 of the world's largest money managers, we were able to establish a new ranking of high-net-worth money managers.

Each of the assets managers were ask how much they run for clients with a net worth of more than $100 million. When filtering through this universe, we found a pretty impressive list of firms that manage hundreds of billions of dollars in assets for these ultra-wealthy individuals. Click here for a look at the Top 50 money managers of high-net-worth assets.

These 50 largest firms run roughly $450 billion in combined assets, with two firms -- J.P. Morgan Asset Management and Morgan Stanley -- running more than half of that total, according to P&I data. JPM ran $149 billion at the end of 2010, and Morgan Stanley $115 billion, according to the data these firms supplied earlier this year.

So two clear leaders emerge as truly being wealth managers, or at least money managers to the world's most wealthy. For more, come back tomorrow for the ranking of the money managers that run the most in family office assets.

And in the meantime, if you'd like check if your firm would truly qualify as a wealth manager, take this quick test we put together last year. See, "Are you a true wealth manager?"
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Fri Aug 12, 2011 11:52 pm

Screen shot 2011-08-07 at 11.25.00 AM.png

click to enlarge image

INVESTOR CLINIC
The difference between advisers and counsellors
JOHN HEINZL | Columnist profile | E-mail
From Wednesday's Globe and Mail
Published Tuesday, Jul. 26, 2011
What is the difference between a financial adviser and an investment counsellor?

When people say they have a financial adviser, they’re usually dealing with a commissioned salesperson employed by a brokerage firm. Financial advisers are also known as account executives, stock brokers, registered representatives, wealth advisers and other titles that suggest financial expertise. In most cases, however, advisers are salespeople compensated via commissions for buying and selling stocks, bonds or mutual funds, although a growing number of advisers are moving toward a fee structure based on a percentage of the client’s assets.

MORE RELATED TO THIS STORY
Financial advice business needs to grow up
Is your adviser simply churning your funds?
Why advisers may not set you on right retirement path


When dealing with a commissioned adviser, clients must be mindful of potential conflicts of interest. An unscrupulous adviser may recommend products, not because they suit the client’s needs, but because they generate the highest commissions. There are plenty of honest, hard-working advisers who have their clients’ best interests at heart, but there are also dishonest advisers who churn accounts, recommend inappropriate products and otherwise inflict financial pain on the people they are supposed to be helping.

One way to minimize the potential for conflicts of interest is to work with an investment counsellor. Also known as a portfolio manager, these firms or individuals generally have rigorous educational and ethical standards, typically work with higher net-worth individuals and also often manage money for foundations, endowments, pension funds and other institutions. They differ from commissioned advisers in several key respects:

Asset-based fees

Investment counsel firms charge a fee based on a percentage – usually 1 to 2 per cent – of the assets they manage, with larger accounts typically qualifying for the lowest rates. Fees are broken out explicitly on statements so the client knows exactly what he or she is paying, unlike mutual fund fees, which are deducted silently from the assets of the fund (which explains why many mutual fund investors don’t even realize they are paying fees at all!).

Discretionary management

A portfolio manager has the authority to buy and sell securities without the client’s prior approval, as long as the securities meet the client’s goals and risk tolerance as described in an investment policy statement. While handing over trading authority may sound dangerous, because portfolio managers don’t work on commission, they aren’t tempted to overtrade to line their own pockets.

Fiduciary duty

By law, portfolio managers have a fiduciary duty to act in the client’s best interest. Advisers, on the other hand, merely have to recommend products that are appropriate, even if there are other, more appropriate, alternatives. What’s more, most portfolio managers have earned the coveted Chartered Financial Analyst designation, the gold standard in the investment industry, whereas advisers aren’t required to complete such rigorous education.

Larger accounts

Generally, you’ll need a couple of hundred thousand dollars to gain access to investment counsel, and at that level you’ll probably only qualify for the firm’s “pooled funds,” which are similar in structure to mutual funds, but typically have lower fees. Many investment counsel firms also sell low-fee mutual funds to the public, usually with higher minimum investments than other funds.

For larger accounts – minimums generally range from $500,000 to more than $2-million – firms will manage a fully segregated and personalized account on the client’s behalf, tailoring the asset mix to the client’s goals, stage in life, risk tolerance and other factors. Clients with complex tax, estate or private business issues may also benefit from the expertise of an investment counsellor.

Other designations

We’ve only mentioned a few of the myriad financial designations in use today. In addition to financial advisers and portfolio managers, there are financial planners who work on commission, others who charge an hourly fee, and some who do a bit of both. Some financial industry employees are licensed to sell only mutual funds, insurance products, or both.



Do your homework

If you’re searching for an investment counsel firm, here are some questions to ask:


Is the firm registered with the provincial securities commission?
What is the minimum account size?
Are client assets held with a third-party custodian?
How long has the firm been in business?
How does the firm define its style?
Do the investment professionals carry the Chartered Financial Analyst designation?
Will the firm develop with you an investment policy statement that reflects your objectives?
How often are representatives of the firm available to meet?
On what basis are the investment management fees calculated? How frequently are they charged?
Will the firm provide you with names of clients for reference purposes?
For a list of investment counsels, minimum account sizes and other tips on selecting a firm, see the Portfolio Management Association of Canada’s website at portfoliomanagement.org

from http://www.theglobeandmail.com/globe-in ... le2110444/

changeup from salesperson to dealing rep
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Sun Aug 07, 2011 10:31 am

Screen shot 2011-08-07 at 11.25.00 AM.png
http://faircanada.ca/top-news/mandate-requirement-to-put-clients-best-interests-first-fair-canada/
Feb 24, 2011

Mandate Requirement to Put Clients’ Best Interests First:
FAIR Canada

Canadian retail investors depend on the integrity of the client-financial advisor relationship and consumers believe that those providing investment advice are acting in their best interests. Financial institutions and financial advisors’ marketing and advertising also gives consumers the impression that they will provide advice that is in the client’s best interests. Regulatory requirements need to be changed to be better aligned with consumer expectations.

FAIR Canada, the Hennick Centre for Business and Law, and the Toronto CFA Society convened an Expert Roundtable, bringing together investor advocates, industry participants and regulators to examine the need for, and implications of, introducing a requirement for financial firms and financial advisors to put clients’ best interests first.

“Canadian investors need clearly defined protections,” said Ilana Singer, Deputy Director, FAIR Canada. “A uniform, national requirement for financial advisors to place their clients’ interests ahead of their own and their firm’s interests would help clarify the financial client-advisor relationship. It would also demonstrate that Canada is keeping pace with best practices in other developed markets in this important area.”

Countries such as U.S. and the UK have moved ahead of Canada in their initiatives to strengthen investor protections within the client-financial advisor relationship.

Today’s Expert Roundtable discussion focused on three key areas: (1) the current regulatory framework governing client-advisor relationships; (2) what, if any, changes might offer better protection for investors; and (3) what the practical implications of a change in framework might be for industry, investors and regulators.

In grappling with this complex issue, it was observed that investors are faced with enormous challenges when working with financial advisors. “Codifying a standard that puts clients’ best interests first will only ignite positive change if its meaning is clearly defined in comparison to the existing standard,” noted Ms. Singer.

“Regretfully, many investors are vulnerable to being sold complex, high-fee products that can be contrary to consumers’ best interests by salespeople that hold themselves out as trusted financial advisors,” said Ermanno Pascutto, Executive Director, FAIR Canada.

Mr. Pascutto concluded, “Current legal requirements for financial advisors are a mix of “suitability” obligations and “buyer beware”, although consumers may not be aware of this. Mandating a uniform national requirement, together with clearly defined consequences for failure to comply, would display strong dedication and commitment by Canada’s regulators and governments to strengthening investor protection. The financial industry should support a duty to act in the client’s best interests if they want to restore public trust in the financial industry.”

(advocate comments: I will post (following) two items which support the claim that investment sellers have ALWAYS had an obligation to put client interests first. It is just that self regulation leads to de-criminalization, and this abuse of the client interest is but one example of such de-criminalization.)
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Fri Aug 05, 2011 12:27 pm

This is a good article that helps illustrate the dozen different "opinions" or thoughts on the salesperson or "advisor" question. It is a billion dollar question:
http://communities.canada.com/vancouver ... ators.aspx
====================
Vancouver Sun
David Baines: Victoria financial planner David Michaels sidelined by insurance regulators

By DAVID BAINES 4 AUG 2011

Filed under: b.c. securities commission, Insurance Council of B.C., David Michaels, Gerry Matier
Victoria financial planner David Michaels, principal of Michaels Wealth Management, has been prohibited from selling insurance products.

Gerry Matier, executive director of the Insurance Council of B.C., said in an interview Thursday that Michaels’ licence is contingent on him being supervised by an experienced life insurance agent. However, Michaels' supervisor, Arthur Rowland of North Vancouver, declined to continue his supervisory role, which means Michaels’ licence has been rendered inactive.

The action follows a series of reports in The Vancouver Sun that Michaels sold tens of millions of dollars of high-risk illiquid securities investments to people who, due to age or financial circumstance, should never have bought them in the first place.

The general rule in B.C. is that nobody can sell or advise in securities unless they are registered to sell securities. However, Michaels sold these investments under exemptions from prospectus and registration requirements in the B.C. Securities Act.

He advertised these investments as safe and secure, and promised high returns, however, many of them have collapsed or discontinued distributions to investors. Among them are Focused Money Solutions, Pepper Creek Oil & Gas, and the Bethel Care facility in Sidney, B.C.

B.C. Securities Commission investigators are now trying to determine whether Michaels, in the course of selling these products, advised people to buy them, which he could not legally do because he was not registered as an securities advisor.

This is not the first time Michaels has been in regulatory trouble. He was previously licensed as a mutual fund salesman with Dundee Securities. Then, in 2004, he was caught selling penny stock in off-book transactions with clients and borrowing money from clients, then lying about it to investigators.

The Investment Dealers Association of Canada (now the Investment Industry Regulatory Organization of Canada) revoked his mutual fund licence for two months and fined him $60,000. When his suspension expired, he did not get re-licensed as a securities salesman or advisor, but that did not preclude him from selling exempt securities products.

He also held an insurance licence, but due to his securities problems, the insurance council insisted he be supervised by an experienced life insurance agent. That supervisor bowed out last week after The Sun reported that Michaels’ clients had lost, or stood to lose, substantial amounts of money on account of exempt securities products that he had sold them.

Although Michaels has been precluded from selling insurance products, at least until be finds another supervisor satisfactory to the insurance council, that does not necessarily end the matter. The council has become increasingly concerned about insurance agents who sell exempt securities products to their clients, particularly if the agent has advised the client to liquidate insurance products to pay for these investments.

Matier said that, as a matter of policy, he could not confirm or deny that the council is investigating Michaels’s conduct, but he noted that the council is permitted to pursue agents even if they have left the industry or are no longer active.

dbaines@vancouversun.com

=============

Advocate comment.......there does that clear it up for you........the industry is making up the story AFTER the fact to support whatever behaviours they wish to support. Use this kind of obvious subterfuge to GET YOUR MONEY BACK if you have been dealing with a guy who cannot tell you, let alone show you what his license says.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Fri Jul 01, 2011 4:05 pm

The FPSC’s October 27, 2004, Complaint alleged that he’d

Breached CFP Rules: 101, 202, 302, 403, 606, 607, 608, 609, 702 and 705

http://www.cfp-ca.org/public/public_cod ... mplete.asp


Code of Ethics
Preamble and Applicability
This Code of Ethics (the "Code") has been adopted by Financial Planners Standards Council ("FPSC") to provide principles and rules to all persons whom it has recognized and certified to use the "CFP", "Certified Financial Planner" and CFP flame logo trademarks (collectively, the "Marks"). These Marks are owned by the Financial Planning Standards Board Ltd. ("FPSB"), and FPSC is the sole organization authorized by FPSB to award them in Canada. FPSC determines who is recognized and certified to use these Marks. Implicit in FPSC's acceptance of this authorization is an obligation not only to ensure compliance with the mandates and requirements of all applicable laws and regulations, but also to require its CFP-designated professionals to act in an ethical and professionally responsible manner becoming of the financial planning profession.
For purposes of this Code, a person recognized and certified by FPSC to use the Marks is called a CFP professional. This Code applies to CFP professionals actively involved in the practice of financial planning, in other areas of financial services, in industry, in related professions, in government, in education or in any other professional activity in which the Marks are used in the performance of their professional responsibilities. In addition, some principles, specifically Principle 1 and Principle 6, also apply more generally to the activities of CFP professionals even when acting outside the scope of their capacity as financial planning practitioners.

Composition and Scope
The Code consists of two parts: Part 1 - Principles and Part II - Rules. The Principles are statements expressing in general terms the ethical and professional ideals of CFP professionals, ideals they should strive to display in their professional activities. As such the Principles are intended to be a source of guidance for CFP professionals. The comments following each Principle further explain the meaning of the Principle. The Rules provide practical guidelines derived from the tenets embodied in the Principles. As such, the Rules set forth the standards of ethical and professional conduct expected to be followed in particular situations. This Code does not undertake to define standards of professional conduct of CFP professionals for purposes of civil liability.
The Code is structured so that the presentation of the Rules parallels the presentation of the Principles. For example, the Rules which relate to Principle 1 (Integrity) are numbered in the 100 to 199 series while those Rules relating to Principle 2 (Objectivity) are numbered in the 200 to 299 series.

Compliance
The FPSC Board of Directors requires adherence to this Code by all those it recognizes and certifies to use its Marks. Compliance with the Code, individually and by the profession as a whole, depends on each CFP professional's knowledge of and adherence to the Principles and applicable Rules, the influence of fellow professionals and public opinion, and disciplinary proceedings, when necessary, involving CFP professionals who fail to comply with the applicable provisions of the Code.
Terminology In This Code
"CFP professional" a person who holds the CFP designation from FPSC.
"Commission" compensation received by an agent or broker calculated as a percentage of the sales or purchase amount.
"Conflict(s) of interest" circumstances, relationships or other facts about the CFP professional's own financial, business, property and/or personal interests that may, as it may appear to a reasonable observer, impair the CFP professional's ability to render disinterested advice, recommendations or services.
"Contingency fee" a fee determined either as a percentage or otherwise, by reference to the results of the Financial Planning rendered.
"Fee-for-service" a method of compensation where a CFP professional is paid directly by the client and where neither the CFP professional nor any related party receives compensation related to the purchase or sale of any financial product. A "related party" for this purpose shall mean an individual or entity from whom any direct or indirect economic benefit is derived by the CFP professional as a result of implementing a recommendation made by the CFP professional.
"Financial Planning" the process of creating strategies, considering all relevant aspects of a client's financial situation, to manage financial affairs to meet the client's life goals.
Part I - Principles
Introduction
These Principles of the Code recognize the individual CFP professional's responsibilities to the public, clients, colleagues, employers and to the profession. They apply to all CFP professionals in all aspects of their work, and provide specific guidance to them in the performance of financial planning.
Principle 1: Integrity
A CFP professional shall always act with integrity.
CFP professionals may be placed by clients in positions of trust and confidence. The ultimate source of such public trust is the CFP professional's personal integrity. In deciding what is right and just, a CFP professional should rely on his or her integrity as the appropriate touchstone. Integrity demands honesty and candor that must not be subordinated to personal gain and advantage. Within the characteristic of integrity, allowance can be made for legitimate difference of opinion; but integrity cannot co-exist with deceit or subordination of one's principles. Integrity requires the CFP professional to observe not only the letter but also the spirit of this Code.
Principle 2: Objectivity
A CFP professional shall be objective in providing financial planning to clients.
Objectivity requires intellectual honesty and impartiality. It is an essential quality for any professional. Regardless of the particular service rendered or the capacity in which a CFP professional functions, a CFP professional should protect the integrity of his or her work, maintain objectivity, and avoid the subordination of his or her judgment, which would be in violation of this Code.
Principle 3: Competence
A CFP professional shall provide services to clients competently and maintain the necessary knowledge and skill to continue to do so in those areas in which the CFP professional is engaged.
One is competent only when one has attained and maintained an adequate level of knowledge and skill, and applies that knowledge effectively in providing services to clients. Competence also includes the wisdom to recognize the limitations of that knowledge and when consultation or client referral is appropriate. A CFP professional, by virtue of having earned the CFP designation, is deemed to be qualified to practice financial planning. However, in addition to assimilating the core competencies and knowledge required, and acquiring the necessary experience, a CFP professional shall make a commitment to continuous learning and professional development.
Principle 4: Fairness
A CFP professional shall perform financial planning in a manner that is fair and reasonable to clients, principals, partners, and employers and shall disclose conflicts of interest in providing such services.
Fairness requires impartiality, intellectual honesty, and disclosure of conflicts of interest. It involves a subordination of one's own feelings, prejudices, and desires so as to achieve a proper balance of conflicting interests. Fairness is treating others in the same fashion that one would want to be treated and is an essential trait of any professional.
Principle 5: Confidentiality
A CFP professional shall maintain confidentiality of all client information.
A client, by seeking the services of a CFP professional, expects to develop a relationship of personal trust and confidence. This type of relationship must be built upon the understanding that information supplied to the CFP professional will be confidential. In order to provide financial planning effectively and to protect the client's privacy, the CFP professional shall safeguard the confidentiality of such information.
Principle 6: Professionalism
A CFP professional's conduct in all matters shall reflect credit upon the profession.
A CFP professional shall behave in a manner that maintains the good reputation of the profession and its ability to serve the public interest. A CFP professional shall avoid activities that adversely affect the quality of his or her financial planning advice.
Principle 7: Diligence
A CFP professional shall act diligently in providing financial planning.
Diligence is the provision of services in a prompt and thorough manner. Diligence also includes proper planning for and supervision of the rendering of professional services.
Part II - Rules
Introduction
These Rules provide practical guidelines derived from the tenets embodied in the Principles. As such, the Rules set forth the standards of ethical and professionally responsible conduct expected to be followed in particular situations.
Principle 1: Integrity
A CFP professional shall always act with integrity.

Rule 101 - A CFP professional shall not engage in or associate with conduct involving dishonesty, fraud, deceit or misrepresentation, or knowingly make a false or misleading statement.
Rule 102 - A CFP professional has the following responsibilities regarding funds and/or other property of clients:
a. A CFP professional who takes custody of all or any part of a client's assets for investment purposes, shall do so with the care required of a fiduciary;
b. In exercising custody of, or discretionary authority over, client funds or other property, a CFP professional shall act only in accordance with the authority set forth in the governing legal instrument (e.g., special power of attorney, trust deed, letters testamentary, etc.);
c. A CFP professional shall identify and keep complete records of all funds or other property of a client in the custody, or under the discretionary authority, of the CFP professional;
d. Upon receiving funds or other property of a client, a CFP professional shall promptly or as otherwise permitted by law or provided by agreement with the client, deliver to the client or third party any funds or other property that the client or third party is entitled to receive and, upon request by the client or any person duly authorized, render a full accounting regarding such funds or other property;
e. A CFP professional shall not commingle client funds or other property with a CFP professional's personal funds and/or other property or the funds and/or other property of a CFP professional's firm. Commingling one or more clients' funds or other property together is permitted, subject to compliance with applicable legal requirements and provided accurate records are maintained for each client's funds or other property;
f. A CFP professional shall not use, transfer, withdraw or otherwise employ funds or property for his or her fees, or for any other purpose not provided for in the engagement, except when authorized in writing by the client; and
g. A client's assets in the custody of the CFP professional shall be used only for the means intended.
Rule 103 - A CFP professional shall not solicit clients through false or misleading communications or advertisements, and for greater certainty:
a. a CFP professional shall not make a false or misleading communication about the size, scope or areas of competence of the CFP professional's practice or of any organization with which the CFP professional is associated;
b. a CFP professional shall not make false or misleading communications to the public or create unverifiable expectations regarding matters relating to financial planning or competence of the CFP professional; and
c. a CFP professional shall not give the impression that he/she is representing the views of FPSC or any other group unless the CFP professional has been authorized to do so.
Principle 2: Objectivity
A CFP professional shall be objective in providing financial planning to clients.

Rule 201 - A CFP professional shall exercise reasonable and prudent professional judgment in providing financial planning.
Rule 202 - A CFP professional shall act in the interests of the client.

Principle 3: Competence
A CFP professional shall provide financial planning to clients competently and maintain the necessary competence and knowledge to continue to do so in those areas in which the CFP professional is engaged.

Rule 301 - A CFP professional shall offer advice only in those areas in which the CFP professional is competent to do so. In areas where the CFP professional is not sufficiently competent, the CFP professional shall seek the counsel of qualified individuals and/or refer clients to such parties.
Rule 302 - A CFP professional shall abstain from intervening in the personal affairs of the client on matters outside the scope of the engagement.

Principle 4: Fairness
A CFP professional shall perform financial planning in a manner that is fair and reasonable to clients, principals, partners, and employers, and shall disclose conflicts of interest in providing such services.

Rule 401 - A CFP professional shall make timely written disclosure of all material information relative to the professional relationship. Written disclosures that include the following information are considered to be in compliance with this Rule:
a. A statement indicating whether the CFP professional's compensation arrangements involve fee-for-service, commission, salary, or any combination of the foregoing. A CFP professional shall not hold out as a fee-for-service practitioner if the CFP professional receives commissions or other forms of economic benefit from parties other than the client;
b. Where financial products are used in implementing the planning strategy, the client must be informed of the basis upon which the CFP professional is compensated. To this end, the CFP professional is governed by the accepted sales disclosure guidelines and regulations covering securities, mutual funds, real estate, insurance and other financial products utilized in fulfilling the plan;
c. A statement describing material agency or employment relationships a CFP professional (or his/her firm) has with third parties, including the nature of the compensation arrangements.
d. A statement identifying any conflicts of interest; and
e. The information required by all laws and regulations applicable to the relationship in a manner complying with such.
Rule 402 - In rendering services (such as taking an order for securities or insurance coverage) that do not encompass financial planning, a CFP professional shall inform the client of the scope of the services that shall be rendered and that the CFP professional is not taking on the responsibilities of a financial planner. Such understanding obtained at the start of a relationship need be updated only when the nature of the services to be performed changes.
Rule 403 - A CFP professional shall inform the client of changes in circumstances and material information that arise subsequent to the original engagement that may have an impact on the professional relationship or services to be rendered. Such changes include, but are not limited to:
a. conflicts of interest;
b. the CFP professional's business affiliation;
c. compensation structure affecting the professional services to be rendered; and
d. new or changed agency relationships.
Rule 404 - Where financial planning may be compensated for on a contingency fee basis, such a fee arrangement must be disclosed in writing to the client.
Rule 405 - A CFP professional shall not engage in discriminatory practices as defined in applicable human rights legislation.

Principle 5: Confidentiality
A CFP professional shall maintain confidentiality of all client information.

Rule 501 - A CFP professional shall not disclose any confidential client information without the specific consent of the client unless in response to proper legal or regulatory process. A client's name shall not be disclosed to another party unless specific consent has been granted for the use of the client as a reference.
Rule 502 - A CFP professional is bound to professional secrecy and may not disclose confidential information revealed by reason of his or her position or profession unless required by law.
Rule 503 - The use of client information for personal benefit is improper, whether or not it actually causes harm to the client.
Rule 504 - A CFP professional shall maintain the same standards of confidentiality for employers as for clients while employed and thereafter.
Rule 505 - A CFP professional doing business as a partner or principal of a financial services firm owes to the CFP professional's partners or co-owners a responsibility to act in good faith. This includes, but is not limited to, adherence to reasonable expectations of confidentiality both while in business together and thereafter.

Principle 6: Professionalism
A CFP professional's conduct in all matters shall reflect credit upon the profession.

Rule 601 - A CFP professional shall not engage in any conduct that reflects adversely on his or her integrity or fitness as a CFP professional, upon the Marks, or upon the profession.
Rule 602 - A CFP professional shall use the Marks in compliance with the rules and regulations of FPSC, as established and amended from time to time.
Rule 603 - A CFP professional who has knowledge that another CFP professional has committed a violation of this Code, which raises substantial questions as to the CFP professional's honesty, trustworthiness or fitness as a CFP professional in other respects, shall promptly inform FPSC. This rule does not require disclosure of information or reporting based on knowledge gained as a consultant or expert witness in anticipation of or related to litigation or other dispute resolution mechanisms. For purposes of this rule, knowledge means no substantial doubt.
Rule 604 - A CFP professional shall not criticize another CFP professional without first submitting this criticism to the CFP professional for explanation. Where the criticism may result in a complaint being lodged with FPSC, the CFP professional must, where required, first submit that criticism in writing to the other CFP professional for explanation. Notwithstanding this rule, a CFP professional may first submit a criticism of another CFP professional to FPSC, should the matter be considered of such a nature that prior notice is not appropriate.
Rule 605 - A CFP professional who has knowledge that raises a substantial question of unprofessional, fraudulent or illegal conduct by a CFP professional or other financial professional, shall promptly inform the appropriate regulatory and/or professional disciplinary body. This rule does not require disclosure or reporting of information gained as a consultant or expert witness in anticipation of, or related to litigation or other dispute resolution mechanisms. For purposes of this Rule, knowledge means no substantial doubt.
Rule 606 - A CFP professional who has reason to suspect illegal conduct within the CFP professional's organization shall make timely disclosure of the available evidence to the CFP professional's immediate supervisor and/or partners or co-owners. If the CFP professional is convinced that illegal conduct exists within the CFP professional's organization, and that appropriate measures are not taken to remedy the situation, the CFP professional shall, where appropriate, alert the appropriate regulatory authorities including FPSC in a timely manner.
Rule 607 - A CFP professional shall perform financial planning in accordance with applicable laws, rules, regulations and established policies of governmental agencies or other applicable authorities including FPSC.
Rule 608 - A CFP professional shall not adopt any method of obtaining or retaining clients that tends to lower the standard of dignity of the profession.
Rule 609 - A CFP professional shall not practice any other profession or offer to provide such additional services unless the CFP professional is qualified to practice in those fields and is licensed or registered as required by law.
Rule 610 - A CFP professional shall return the client's original records in a timely manner after their return has been requested by the client.
Rule 611 - A CFP professional shall not bring or threaten to bring a disciplinary proceeding under this Code, or report or threaten to report information to FPSC pursuant to Rules 602 or 603 or make or threaten to make use of this Code for no substantial purpose other than to harass, maliciously injure, embarrass and/or unfairly burden another CFP professional.
Principle 7: Diligence
A CFP professional shall act diligently in providing financial planning.

Rule 701 - A CFP professional shall enter into a client engagement only after securing sufficient information to be satisfied that the relationship is warranted by the individual's needs and objectives, and that the CFP professional has the ability to either provide the requisite competent services or to involve and supervise other professionals who can provide such services.
Rule 702 - A CFP professional shall make and/or implement only those recommendations that are suitable for the client.
Rule 703 - Consistent with the nature and scope of the engagement, a CFP professional shall carry out a reasonable investigation regarding the financial products recommended to clients. Such an investigation may be made by the CFP professional or by others provided the CFP professional acts reasonably in relying upon such investigation.
Rule 704 - Before ceasing to act for a client, a CFP professional shall give the client reasonable advanced notice of his or her intent and shall make sure the withdrawal will not prejudice the client.
Rule 705 - A CFP professional shall properly supervise subordinates with regard to their delivery of financial planning, and shall not accept or condone conduct in violation of this Code.


(advocate comment......unfortunately four out of five with the CFP designation freely violate any number of these rules on a daily basis, without repercussion. "Profits first, rules if they do not interfere". With self regulation comes "decriminalization".)
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Jun 14, 2011 11:39 pm

.......continued from previous three postings on the topic of client misrepresentation by the industry and willful blindness by the people who purport to self regulate:
==================================================================================================================

Two questions for the MFDA.

Question # 1, Misrepresentation refers to the MFDA requirement not to
mislead, misinform or misrepresent oneself or ones role as an
investment industry employee.

For example, MFDA Rule 1.2.1(e) generally prohibits Approved Persons
from using any business name (or title) or designation that deceives
or misleads, or could reasonably be expected to deceive or mislead, a
client or any other person as to the proficiency or qualifications of
the Approved Person. In addition, business titles that deceive or
mislead clients or the public as to the Approved Person's category of
registration are also prohibited.


How then, do you justify and allow investment persons who are
registered, licensed, and compensated in the license category of
"salesperson", to inform, advertise, and generally represent
themselves to the public as being trusted, professional, "advisors"?
(advisor being a totally different license and registration category,
different duty of care, different motivation and compensation)

Question #2, Suitability refers to the MFDA requirement that
investment industry persons should ensure that each and every trade
meet suitability requirements:

From MFDA MEMBER REGULATION NOTICE MR-0069 regarding “suitability”. To the extent that there is subjectivity in the analysis, the expectation
of MFDA staff is that the Member and AP take the most conservative
approach and act in the best interests of the client:

How do you explain (or allow) mutual fund salespersons to place mutual
funds product sales into the highest revenue generating mutual fund
class (DSC), when equal and identical mutual fund classes are more
cost effective to the client, and therefore more suitable for the
client?" This practice is forbidden by US regulators, yet accepted or
ignored by yours. Why?

I believe that actions or infractions against the public, such as the
above, are a contributing factor in bringing about the conditions of a
“perfect storm” in our financial markets. I ask that you please
explain your part in condoning these actions or in failing to police
them.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Jun 14, 2011 11:19 pm

........continued from previous two postings about MFDA moral blindness in assisting (or allowing) known client misrepresentation, contrary to MFDA rules, codes, principles of honesty, fair play etc.
===========================================================================================================================

MFDA Rule 1.2.1 (e) prohibits the use of misleading business titles, qualifications and designations. While the MFDA does not mandate a specific title given the various number of acceptable titles, professions, designations and qualifications in use by its 75,000 Approved Persons, we do review business cards in the normal course of our examinations to assess compliance with MFDA Rule 1.2.1 (e). Any instances of non-compliance are addressed at that time. Currently there are no public enforcement proceedings in process with respect to MFDA Rule 1.2.1(e).

In your email you reference the fact that business cards you have seen do not mention “registration designation”. Securities legislation (except for Quebec) and the SRO Rules of IIROC and the MFDA do not mandate the sole use of an individual’s category of registration. Given all salespersons for all types of dealers are considered “dealing representatives” under National Instrument 31-103, such disclosure would not be particularly useful for investors. In Quebec, while NI31-103 still applies, they also have additional local requirements given their combined role as regulator for insurance and securities activity in the province.

Thanks

Ken


Ken Woodard
Director, Communications & Membership Services
Mutual Fund Dealers Association
121 King Street West
Toronto, ON M5H 3T9
(t) 416-943-4602
(f) 416-943-1218

(advocate comments......."such disclosure would not be particularly useful for investors"........soooo, by not requiring them to disclose their actual registration due to it being "not particularly useful", by what particular logic does the MFDA then allow a totally separate, misleading to the consumer, and unture disclosure to be made to the client? (ie, the failing to disclose to the client that your "advisor" is licensed and paid only as a salesperson, with no duty of care to the customer.........and the second MFDA failure of allowing this same person to then carry the misrepresentation a further level, by claiming a name, title, or job category which suggests some other kind of professional relationship exists.

As one commenter to the SEC said in the Financial Post on Feb 15th, 2011, "If the product sold is that of advice, then that advice should be in the best interest of the client. Anything else is fraud, because the seller is delivering a service different from what the consumer thinks he or she is buying." ( Edward Waitzer, Financial Post · Tuesday, Feb. 15, 2011 article) (of course this article was deleted from the Post web archive and is no longer available online........threats of offending major advertisers causes fraud to win again. )
http://www.financialpost.com/news/Make+ ... story.html
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Jun 14, 2011 10:58 pm

Further to the posting of a few minutes ago (found right after this posting), I went looking for related info and found this rule section from the MFDA instead:

1. Relationship Disclosure Requirements
Rule 2.2.5 (Relationship Disclosure) requires that, on account opening, all clients be provided with written disclosure that sets out certain core information about the nature of their relationship with the Member and its Approved Persons. The required disclosure, which may be adopted in one document or several, includes a description of:
• the nature of the advisory relationship; • products and services offered by the Member; • the Member’s procedures regarding the receipt and handling of client cash/cheques;
• the Member’s obligation to ensure that each order accepted or recommendation made is suitable for the client and advising when the Member will assess the suitability of investments in the client’s account;
(advocate comments on the above are this:

1. wouldn't you think that part of the "all clients be provided with written disclosure that sets out certain core information about the nature of their relationship" rule would include the part where the salesperson has to place in writing that they are indeed a salesperson, rather than continuing the ruse of "financial planner", "wealth manager", "consultant", "advisor", or about anything but what they are licensed and compensated as?
2. And as for "the nature of the advisory relationship", it is probably not practiced that they should be telling clients that they are not licensed, nor compensated as advisors, but only as salespersons. (I will dually post this info in "GET YOUR MONEY BACK" topic as this matter should be available for the courts to decide upon)
3. The suitability obligation is also discussed in the get your money back section. The industry position is this: "everything we sell is suitable". Whereas the industry practice is to search among the open field of "suitable investments and too often sell the one which pays the most commission. Further, if two otherwise identical investments are available, the industry tends to strongly favour sales of the choice which gives them the higher commission. Evidence of sales (and not advisory) relationship is very heavy and goes beyond the fact that most are licensed in the category of sales.
4. It is simple consumer fraud, when an industry participant misrepresents his services, AND his license to provide those services. Inflating his position to one where no such duty or qualifications exist is a criminal offence. The only reason it is allowed is due to a plethora of organizations like the MFDA, who tout great rules, but enforce only those they so choose. It allows an entire industry of "reputation protection" to be built around the financial industry, allows them to capture the high moral ground with this, and then allows them to do immoral things to the public and skim billions of dollars with impunity............to be continued when I find the "title inflation" rule that I was originally looking for.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Jun 14, 2011 10:31 pm

Screen shot 2011-06-14 at 11.20.41 PM.png
Screen shot 2011-06-14 at 11.21.17 PM.png
Images from an MFDA decision found rather interesting. Of particular note is the use of the words "registered as a mutual fund salesperson" to properly identify the registration categories of persons licensed with the MFDA. Yet the MFDA turns a blind eye to the misrepresentation of 99% of those salespersons who go out into the public and identify themselves as nearly "anything" but a salesperson, what they are licensed as.

It is against industry rules, laws and principles to lead clients astray by urging them believe that their salesperson is some version of trusted fiduciary or other professional representative, when it is not true. The MFDA has rules against this which are produced elsewhere in this forum. They have also issued reminders against violations such as this "title inflation". It is unfortunate that they fail to enforce them, but it is quite indicative of how self regulation leads to decriminalization and rampant self interest.
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Re: advisor fraud, professionals, or salespeople masqueradin

Postby admin » Tue Jun 14, 2011 10:52 am

June 13, 2011
Financial advice business needs to grow up
By ROB CARRICK
From Tuesday's Globe and Mail
A new coalition plans to establish credentials for financial planners - client-focused service would be a good start

When the financial advice business in Canada grows up, what does it want to be?

A new group called the Coalition for Professional Standards for Financial Planners [http://coalitionforprofessionalstandards.ca] offers a clue. As a first step toward making planning a true profession, it wants to establish a set of credentials that would define what a financial planner is.

May the force be with you, my coalition friends. Never has an industry needed to grow up like the financial advice biz.

People who want help with financial matters as opposed to doing things themselves have this selection of providers to choose from:

-The financial adviser: Sells investments, may or may not provide advice.

-The investment adviser: See above.

-The financial planner: Ditto.

-The financial planning consultant: Ibid.

-The wealth manager: Guess.

You could add retirement planner, broker and investment dealer to this list of empty titles that are used interchangeably and thus have no real meaning from the end user's point of view.

How would a mature financial industry look? One idea would be for there to be two windows for people who choose not to look after their money themselves. The first would be for financial planners who provide comprehensive advice and likely sell investments as well. The second would be for investment salespeople who just help people buy mutual funds, stocks and other products.

The coalition is a long way from saying anything that specific about financial advice. Right now, it's developing a statement of principles that will help establish national standards for those who would call themselves financial planners.

Credentials? What Credentials?

Did you know that anyone in most provinces and territories can claim to be a financial planner without any qualifications or supervision?

The coalition should certainly shut that loophole, but a lack of proper accreditation is much less of a problem than fully accredited people who whose sole modus operandi is to sell, not advise. Anyway, ensuring standards for planners won't keep the crooks out. Earl Jones ripped off his clients in the province of Quebec, the one jurisdiction with rules on who can be called a financial planner.

The far bigger issue for the coalition to tackle is getting financial planners on roughly the same professional footing as accountants, engineers, lawyers and doctors. In other words, create a standard of providing client-focused expertise that is subject to tough and well-policed rules of conduct.

Call It What It Is

Oh yeah, another step would be to standardize the name of the profession. Notice that we don't have accounting consultants, accounting planners and accounting advisers. We just have accountants. There are different accounting designations, but the way you know someone is a serious professional is they are called an accountant.

There are already professional-grade advisers out there, but it's challenging to find them. While we wait for all planners to become professionalized, use these five questions to find an adviser as opposed to a sales person:

1. What, besides selling investments, do you do for clients?

The adviser should create a personalized, holistic financial strategy that will put you on track toward a financially comfortable retirement while keeping on top of other matters, such as your debt levels, savings for your kids' education, estate planning, taxes and maybe insurance.

2. Do I get a written financial plan?

The answer should be yes, with the proviso that clients with simpler needs get simpler plans.

3. Can I see one of your financial plans?

Basic.

4. May I speak to some of your existing clients to talk about how your planning expertise has made a difference for them?

Good advisers have their references all queued up.

5. How do you charge for your services?

Flat rates or hourly fees are how professionals in many other fields charge, but you may encounter planners who charge an annual fee of 1 to 2 per cent of your investment holdings, or who charge through commissions on products.

Financial planners aren't the saints of the financial industry, nor will they become so in the future if they emerge as a true profession. And neither are people who sell investments the villains. What's wrong with the financial industry now is that investors can't tell who does what. Turning financial planning into a profession is the answer to that.

THE TEAM

The Coalition for Professional Standards for Financial Planners is trying to develop national standards for financial planners. Here are the groups that make up the coalition:

Canadian Institute of Financial Planners [http://https://www.cifps.ca/public/default.aspx]

Represents advisers who have the certified financial planner designation (CFP).

Financial Advisors Association of Canada [http://www.advocis.ca] (known as Advocis)

An adviser organization with many members drawn from the insurance industry.

Financial Planning Standards Council [http://https://www.fpsc.ca]

Sets standards for the CFP.

Institute of Advanced Financial Planners [http://www.iafp.ca]

Administers the registered financial planner (RFP) designation.

Institut québécois de planification financière [http://www.iqpf.org/index.fr.html]

Sets rules for financial planners in Quebec.
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