Broker/Advisor Disguise and Deception

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Re: Broker/Advisor Disguise and Deception

Postby admin » Wed Jun 19, 2019 8:48 pm

Ron Rhoades says that when brokerage associations (i.e. FSI and SIFMA) and broker-dealers, like Morgan Stanley, offer threatening boycott comments in symphony, that they may very well break the law.
Broker-dealers' new power tactic -- threatening to quit states altogether -- to thwart local fiduciary rules for advisors sure looks like blatant misuse of power

SIFMA, FSI and Morgan Stanley made overt threats to Nevada and New Jersey and CFP Board that have more than a whiff of conspiracy to restrain trade

June 18, 2019 — by Guest Columnist Ron A. Rhoades

Brooke's Note: Desperate times call for even more desperate measures. Threats by Morgan Stanley and their cohorts and lobbyists to pick up their toys and go home if states seek to impose on them a higher standard of fiduciary care are not being made from strength. That said, they certainly are flexing their muscles -- perhaps illegally, according to Ron Rhoades, director of the personal financial planning program at Western Kentucky University. Still, it's hard to imagine that the brokerage industry holds many cards here. What if Nevada, New Jersey or Massachusetts calls their bluff and says, in effect, don't let the door hit you in your posterior on the way out? Some of those deactivated brokers might become RIAs or join a new brokerage firm with hardly a consumer complaint.

In early 2019 broker-dealer Morgan Stanley threatened to stop doing business in Nevada if the state securities division proceeded with plans to adopt a local fiduciary rule for financial advisers.

“Absent substantial changes to the proposal, Morgan Stanley will be unable to provide brokerage services to residents of the state of Nevada,”
said the Wall Street bank in a statement.

The New York City wirehouse is the nation's largest broker-dealer with about 15,500 brokers, advising about $2 trillion in assets. It has four branch offices in Nevada, including one each in Reno, Stateline and two in Las Vegas. It has 500 offices worldwide.

SIFMA's shoulder
Nearly contemporaneously, other firms, including Wells Fargo & Co., Charles Schwab & Co. Inc., and Edward D. Jones & Co. were reported to be considering terminating some of their own brokerage offerings in the state.

Morgan Stanley has warned that it might withdraw from this Las Vegas building and three other branches in Nevada.
Even the Securities and Financial Markets Association (SIFMA), one of two main broker-dealer lobbying associations, appeared to threaten Nevada, stating in its comment letter that some of its member firms might be compelled to “discontinue service to B-D accounts in Nevada.”

More recently, in its June 14 comment letter to the New Jersey Bureau of Securities, the Financial Services Institute (“FSI”), the other main broker-dealer lobbying organization, appeared to threaten that its members would cease doing business in the state, if New Jersey went through with its proposal to apply fiduciary standards.

Robin M. Traxler, FSI's senior vice president and deputy general counsel, stated in FSI’s comment letter:

“If FSI members are held to a unique standard of care ... these financial advisors may have to cease doing business with, or cut back on financial services provided to, retail investors in New Jersey. This would undoubtedly have a negative impact on New Jersey investors, particularly those [who are] low- to middle-income retail investors.”

Similarly, at least one broker-dealer recently wrote to the Certified Financial Planner (CFP) Board of Standards, Inc., to the effect that it and other broker-dealer firms, acting in coordination with their trade association, may meet and determine whether to require their registered representatives to surrender their CFP certifications should the CFP Board proceed to implement its fiduciary standard upon CFPs, effective Oct. 1 this year.

These actual or implied threats beg the question: Are broker-dealers conspiring, either with each other directly, or via their trade associations, to violate federal antitrust and/or trade practices laws?

Sherman Act
Section 1 of the Sherman Act states, “Every contract, combination… or conspiracy in restraint of trade or commerce… is declared to be illegal.”

Robin Traxler:
This would undoubtedly have a negative impact on New Jersey investors, particularly those [who are] low- to middle-income retail investors.”

Section 5 of the Federal Trade Commission (FTC) Act prohibits “unfair or deceptive acts or practices in or affecting commerce.”

Generally, group boycotts are generally impermissible under the law. As stated by the Federal Trade Commission:
“Any company may, on its own, refuse to do business with another firm, but an agreement among competitors not to do business with targeted individuals or businesses may be an illegal boycott, especially if the group of competitors working together has market power.”

The statements made to Nevada and New Jersey might be interpreted by some to imply that the broker-dealer firms seek to maintain the ability to sell investment securities and insurance products that pay its members higher levels of compensation than the compensation that might be available to them under a fiduciary standard (which generally prohibits compensation which is in excess of what is reasonable under the circumstances).

In prior judicial proceedings, similar threats have been held to be illegal. For example, the FTC successfully challenged the group boycott of an association of competing trial lawyers that stopped providing legal services to the District of Columbia for indigent criminal defendants until the District increased the fees it paid for those services.

The Supreme Court upheld the FTC’s ruling in FTC v. Superior Court Trial Lawyers Assn., 493 U.S. 411 (1990), stating that the “boycott constituted a classic restraint of trade within the meaning of Section 1 of the Sherman Act" and that “it also violated the prohibition against unfair methods of competition in 5 of the FTC Act.”

While the broker-dealer trade associations and their members may argue that they are only exercising their free speech rights, the U.S. Supreme Court may likely disagree, It has held that “every concerted effort that is genuinely intended to influence governmental action” is not protected from antitrust concerns.

'Horizontal conspiracies'

Indeed, the U.S. Supreme Court has stated: “Horizontal conspiracies or boycotts designed to exact higher prices or other economic advantages from the government would be immunized on the ground that they are genuinely intended to influence the government to agree to the conspirators' terms.” See: FTC v. Superior Court Trial Lawyers Assn., 493 U.S. 411 (1990).

U.S. Supreme Court Building
The Supreme Court has upheld the FTC's ban on boycotts that restrain trade. (Photo By Joe Ravi)
Trade associations, such as SIFMA and FSI, can serve important purposes. But they must be careful in their activities, especially if such activities would, as a result, restrain trade or serve to promote unfair trade practices.

Group boycotts of a state, or of a standards-setting organization such as the CFP Board of Standards, Inc., can and should face a high degree of scrutiny.

I urge the Federal Trade Commission, and the various state trade commissions, to explore the recent activities undertaken by broker-dealers and their trade associations as described above.

These regulatory bodies should examine the conduct to ascertain if the line – between broker-dealers (and their trade associations) providing information to government regulators or standards-setting bodies lawfully, versus engaging in actions that may serve to restrain trade – has been crossed.

Ron A. Rhoades serves as Director of the Personal Financial Planning Program at Western Kentucky University. This article reflects his own views, and are not those of his employer nor any firm, organization, institution, or cult to which he now or has ever belonged or been kicked out of.
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Re: Broker/Advisor Disguise and Deception

Postby admin » Fri Jun 14, 2019 12:07 pm

“For most Canadians, their experience with the financial planning industry does not involve actual financial planning at all. What it does include is a meeting with an individual who has a title that leads consumers to believe they are receiving financial planning advice. However, in reality consumers are dealing with financial salesperson who is employed by organizations to solicit a specific product or series of products.”

Screen Shot 2019-06-14 at 1.06.51 PM.png ... ar-enough/

At long last, the Ontario government is regulating who can use the titles of financial planner and financial advisor in the province.

The Financial Professionals Title Protection Act was passed earlier this month and the Ontario government is now working on regulations for implementing the law.

It’s hard to believe, but anyone can call themselves a financial planner or advisor and take clients in every province, except Quebec. There’s no need for any special education, training or qualifications to give potentially life-altering financial advice.

Often, the people using the title financial planner, or some other similar title, are actually investment salespeople, as is explained in a report by the Public Interest Advocacy Centre (PIAC).

“For most Canadians, their experience with the financial planning industry does not involve actual financial planning at all. What it does include is a meeting with an individual who has a title that leads consumers to believe they are receiving financial planning advice. However, in reality consumers are dealing with financial salesperson who is employed by organizations to solicit a specific product or series of products.”

The Ontario law will be enforced by the newly created Financial Services Regulatory Authority (FSRA), but the actual awarding of financial planner and financial advisor credentials will be done by professional organizations approved by the FSRA.

Ontario has yet to say which credentials will be recognized or what organizations will be involved in granting them.

While investor advocate Ken Kivenko acknowledges the law is better than no regulation, he was cautious about declaring it a win for investor protection.

“This is potentially a step in the right direction. Let’s wait and see.”
Kivenko says he wants to know who the credential-granting organizations will be, and what standards they will maintain in issuing and overseeing credentials.

He notes industry organizations have a poor record when it comes to supervising the conduct of their own members. And he asks whether the government is really ready to take on the banks and insurance companies over the titles they use for their legions of investment salespeople.

For a better regulatory model, you need look no further than the system in Quebec, where financial planners are regulated by the independent Institut québecois de planification financière (IQPF).

To be certified as a financial planner, individuals must meet high education standards set by the IQPF and follow continuing professional development courses. They are subject to disciplinary penalties for misconduct, must declare conflicts of interest and are prohibited from most self-dealing, according to the PIAC report.

The Quebec system also prohibits the use of a long list of titles, including financial advisor and wealth advisor.

It’s certainly positive that Ontario has moved to regulate the use of financial planning and financial advisor titles. But it remains to be seen how effective the new law will be in protecting investors.

The province needs to ensure the highest standards are maintained throughout the system—from granting credentials, to ongoing professional development to enforcement.

Hopefully, other provinces will soon follow suit. Ideally, there would be just one national regime, and it would be based on the Quebec model. In the real world of Canada’s patchwork of provincial regulators, I’ll settle for a system that actually delivers the quality of advice and protection that investors need and deserve.

About Anthony Layton MBA, CIM®, Chairman of the Board, Portfolio Manager

Tony is a founding partner, Chairman of the Board and Portfolio Manager at PWL in Montreal with over 35 years of experience helping clients achieve their financial goals. He is a firm believer that conflict-free advice is the only way to properly serve Canadian investors. ... ar-enough/
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Re: Broker/Advisor Disguise and Deception

Postby admin » Fri Jun 07, 2019 7:18 am

Advocate comment regarding this article: The CFA designation is indicative of the highest financial standards and ethics that I have found worldwide. I approve of anything I have seen that is CFA produced or related. (Although I am not a CFA:)

07 June 2019
A Rocky Road to Improved Investor Protection

By Mary Leung, CFA
Posted In: Financial Reporting

For most of 2018, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry captured the attention of many in Australia. Through seven rounds of televised and livestreamed hearings, many problems in the industry came to light, including, among others,
advisers providing inappropriate advice, advisers failing to act in the best interest of their clients, conflicted remuneration structures leading to poor outcomes, and firms charging clients fees without providing associated services.
In February this year, the Commission published a final report containing 76 recommendations. If implemented in full, these recommendations would lead to significant changes across a number of fronts, including stricter disclosures, elimination of grandfathered commissions, changes in remuneration structures of both front-line and senior executives, and a revamp in culture and governance.

Of course, Australia is not alone in its concerns about investor protection. In Singapore, the failure of Hyflux Ltd, a water treatment company, has led to substantial losses for those who invested in Hyflux’s preference shares and perpetual securities. Ever since it emerged that many of these investors were individuals, the question as to why and how they were sold these risky instruments has been raised. After all, it has been a decade since the Lehman mini-bond saga; surely the problem of mis-selling should have been well and truly vanquished?

Mis-selling and Remuneration Structure

Unfortunately for many, mis-selling is not a new problem. The issues encountered in Singapore and Australia are symptomatic and only reinforce the negative image some of the public has of the financial services industry. Since the global financial crisis, regulators around the world have responded with a number of policy initiatives to combat mis-selling.

Inevitably, any discussion of mis-selling leads us to the topic of sales commission. Commissions and other monetary inducements are paid to financial advisers if they are successful in pushing products to their clients.
Even though, in some markets, financial advisers owe a duty of care to their clients and should only be selling products that are in their clients’ best interest, very often many are tempted to promote products that bring them the highest revenue, rather than recommend those that best meet their clients’ needs. Sales commissions also incentivize churning of portfolios.

Several jurisdictions have taken steps to address this conflict of interest. India introduced a commission ban in October 2018, and similar regulation has been introduced in South Korea. Taiwan recently eliminated commissions paid to fund distributors for marketing campaigns. On the other hand, market regulators in Hong Kong and Singapore have opted against the banning of commissions. Instead, they have adopted measures intended to improve fee transparency and to mandate disclosure of potential conflicts of interest.

Further afield, regulators in South Africa, Netherlands, and the UK have banned sales commissions paid to advisers outright. European jurisdictions subject to the Markets in Financial Instruments Directive (MiFID II) have also, in effect, instituted a partial ban on commissions, which applies to independent financial advisers. Instead of sales commissions, these markets have moved to a fee-based system.

In the UK, the widespread cases of mis-selling prompted the Retail Distribution Review (RDR) of distribution of financial products that led to a ban on commission payments. The ban relates to retail clients only and covers a range of retail investment products including equities, structured products, investment trusts, and pension policies. As a result of the ban, advisers in the UK can only be paid for their services by their clients.

Ahead of the ban, many commentators believed that the market would shrink, as advisers would leave the retail market altogether, creating an advice gap, or that retail investors would be reluctant to pay for advice. Some worried that even though a ban on commission would create better alignment between advisers and clients, new conflicts may arise. Even though the RDR reform was enacted in 2013, there isn’t yet any conclusive evidence as to how effective it has been and whether it achieved its legislative intent; however, a review undertaken by Europe Economics in 2014 found, among other things, that a ban on commissions had reduced product bias, product charges have been falling, advisers were more professional, and there were better disclosures. The Financial Conduct Authority is expected to conduct a post-implementation review this year.

Full and Fair Disclosure

Regardless of remuneration structures, potential conflicts may exist in a relationship between advisers and their clients. This is due to information asymmetry, which may create intentional or unintentional biases.
A number of research studies have shown that conflicted advisers give significantly more biased advice to the detriment of their clients.

Many regulators have sought to strengthen disclosures and enhance transparency requirements as a means of managing and reducing such conflicts. For example, in Hong Kong, following a consultation initiated in November 2016, the Securities and Futures Commission decided to strengthen the governance of the conduct of intermediaries who marketed themselves as independent and enhance the disclosure of monetary benefits received or receivable.

A frequently heard criticism of increased disclosures is that the increase in volume of disclosures does not necessarily translate into usefulness to the end user.
Very often disclosures are boilerplate and written in legalese. It is critical that investment advisers provide clear, concise, and clearly understandable disclosures, both about their company’s or their personal relationships with investment funds and product managers and how their remuneration is structured.
Investors should be able to ask about and understand the fees they are paying, and the level of professionalism of their adviser, in addition to understanding the potential gain and related risk factors. Without this knowledge, investors cannot make an educated decision on how and when to invest.

There also needs to be recognition that some conflicts of interest cannot be managed and should be completely eliminated. Certain incentives, such as winning sales contests and achieving internal sales targets, are irreconcilable with the concept of a best-interest standard if indeed this is the standard that advisers are held to.

Making It Work Everywhere

Clearly, there is no “one size fits all” solution to the problem of mis-selling. The way in which each jurisdiction responds will reflect current standards in force and the events that took place in their own countries during the last financial crisis. Each market has a different legal and regulatory environment and has different approaches to policy design. However, there are common themes that we can draw on, such as transparency.

In addition to transparency, governments should continue working with regulators and the industry on investor education. People who are financially literate make better financial decisions and manage money better than those without this knowledge. Higher financial literacy also alleviates the problem of asymmetric information between advisers and investors.

Creating Value for Our Clients

Amidst the negative perceptions and realities we often face, it is important to emphasize that the investment industry creates real value for its clients and for the communities it serves. However, for clients and regulators to understand this value, we must act, and be seen to act, as professionals.

Ultimately, advisers must be driven by what is best for their clients. Only by committing to the highest standards of professional and ethical behavior can we develop into a profession which creates tangible value for our clients and ensures finance has a purpose.
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Re: Broker/Advisor Disguise and Deception

Postby admin » Sat May 11, 2019 7:26 pm

Persons seeking information about fraud or false pretenses of industry registrants who proclaim “advisor” or “adviser” status might find information within this page and links to describe the registration categories and what is allowed or not allowed. (it must be noted that there is NO registration category for the word or the title “Advisor”, but there is legislation in most, if not all securities Acts regarding misrepresentation.)

This info comes from pages within the Manitoba Securities Commission ... duals.html

Guide to Individual Categories of Registration Securities Categories
Permitted Activities
Dealing Representative
may act as a dealer or an underwriter in respect of a security that the individual's sponsoring firm is permitted to trade or underwrite.

Advising Representative

may act as an adviser in respect of a security that the individual’s sponsoring firm is permitted to advise.

Associate Advising Representative
may act as an adviser in respect of a security that the individual’s sponsoring firm is permitted to advise on if the advice has been approved under subsection 4.2(1) [associate advising representatives – pre-approval of advice].

Ultimate Designated Person (UDP)
must do all of the following: (a) supervise the activities of the firm that are directed towards ensuring compliance with securities legislation by the firm and each individual acting on the firm’s behalf; (b) promote compliance by the firm, and individuals acting on its behalf, with securities legislation.

Chief Compliance Officer
(a) establish and maintain policies and procedures for assessing compliance by the firm, and individuals
acting on its behalf, with securities legislation;
(b) monitor and assess compliance by the firm, and individuals acting on its behalf, with securities legislation;
(c) report to the ultimate designated person of the firm as soon as possible if the chief compliance officer
becomes aware of any circumstances indicating that the firm, or any individual acting on its behalf, may be
in non-compliance with securities legislation and any of the following apply:
(i) the non-compliance creates, in the opinion of a reasonable person, a risk of harm to a client;
(ii) the non-compliance creates, in the opinion of a reasonable person, a risk of harm to the capital markets;
(iii) the non-compliance is part of a pattern of non- compliance;
(d) submit an annual report to the firm’s board of directors, or individuals acting in a similar capacity for the firm,
for the purpose of assessing compliance by the firm, and individuals acting on its behalf, with securities legislation.
Permitted Activities
Permitted Individual

(a) a director, chief executive officer, chief financial officer, or chief operating officer of a firm, or a functional equivalent of any of those positions,
(b) an individual who has beneficial ownership of, or direct or indirect control or direction over, 10 percent or more of the voting securities of a firm, or
(c) a trustee, executor, administrator or other personal or legal representative, that has direct or indirect control or direction over, 10 percent or more of the voting securities of a firm;


Individual Registration
An individual applying for registration must select one or more registration category. All individual registrations must be sponsored by a registered firm.
Indivdiuals registration categories under The Securities Act (Manitoba) are set out in Part 2 of National Instrument 31-103 - Registration Requirements and Exemptions. ... _guide.pdf ... duals.html

Individualcategories and permitted activities
[ ] Dealing Representative
[ ] Advising Representative
[ ] Associate Advising Representative
[ ] Ultimate Designated Person
[ ] Chief Compliance Officer
[ ] Permitted Individual
[ ] Officer–Specify title:
[ ] Director
[ ] Partner
[ ] Shareholder
[ ] Branch Manager (MFDA members only)
[ ] IIROC approval only ... 0/
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Re: Broker/Advisor Disguise and Deception

Postby admin » Thu May 02, 2019 4:19 pm

Misinformed Consent


John De Goey

There are some phrases that are used in all manner of contexts that are widely understood with a wry smile, but seldom contemplated with the serious effort leading to some sort of metaphysical mega-truth. One of my favourites is: “It ain’t what you don’t know that gets you into trouble, it’s what you know for sure that just ain’t so.” That little observation about the human condition has been mis-attributed to several humourists, including Mark Twain. The truth is that no one knows for sure who said it first. That’s especially ironic because there are lots of people out there who purport to know very well who said it, thereby demonstrating just how universal and applicable the phrase is.

There’s a second quip that I like almost as much. Given that it is more serious, I suspect fewer people have heard it. It is this:
“No reasonable person would consent to being given bad advice.”
In the world of personal finance, so much of what is covered by industry regulation revolves around the notion of informed consent. The problem here is that investor acquiescence is seen as a proxy for proper disclosure and conduct.

Now, let’s combine the two concepts to see where that takes us. How should we react to a situation where there are people who give advice based on concepts that they believe to be true, but are, in fact, not true? What happens when good intentions give way to bad advice?
If I give you advice based on misinformation and you accept and act on that advice, does that constitute “informed consent”?

I am a lifelong proponent of informed consent, but I also believe that there should be a recognition of a necessary premise. That premise is that the options under consideration should be presented fairly and accurately.
I consulted Wikipedia for a readily-accessible definition and here’s what I found: permission granted in the knowledge of the possible consequences, typically that which is given by a patient to a doctor for treatment with full knowledge of the possible risks and benefits. The write-up after the definition goes on to say that: an informed consent can be said to have been given based upon a clear appreciation and understanding of the facts, implications, and consequences of an action.

People who know me would also know that I have long yearned for financial advisors to be thought of (and held to the same standards) as doctors, dentists, lawyers and accountants. Given the definition, there are a few questions that might follow:

If people don’t really understand their options, can informed consent ever truly be provided?
If the people providing options don’t properly understand the salient details of what they are recommending (i.e., if they are unwittingly giving bad advice), does the acceptance of that advice constitute “informed consent”? Wouldn’t the term “misinformed consent” be more appropriate?

Stated differently, is informed consent even possible if the options being forwarded for consideration are incomplete, inappropriate or downright incorrect?
Sure, you might consent. You might have been ‘informed’ about your options from someone who has good intentions (i.e., who is not trying to mislead you). However, if the person making the recommendations is misinformed and is making the recommendations based on misguided beliefs, we have a moral dilemma. If the intentions are good, but the advice is nonetheless bad, how do we characterize the acceptance and implementation of that advice? Would your opinion change if the person giving the unwittingly bad advice refused to change the advice once the error in her ways was pointed out to her?

Full article can be found at the link below.

John J. De Goey, CIM, CFP, FELLOW OF FPSC™ is a registrant with Wellington-Altus Private Wealth Inc. (WAPW). WAPW is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC).
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Re: Broker/Advisor Disguise and Deception

Postby admin » Tue Apr 30, 2019 2:37 pm

At 1:20 "if you really do start a business model that says, my clients aren't my clients, they are really counter-parties that I can make money off shouldn't be surprised if you end up with a culture that is a greed culture that really doesn't do the right thing all the time…”

In a total time of about 3 min and 20 seconds, TD’s Ed Clark and Tony Robbins sum up the bait and switch that Mr. F was subjected to at his bank, where the firm and the broker says “trust me I am your advisor”, while dishonestly hiding from Mr. Fullerton the fact that they are mere salepersons and can (and do) treat Mr. F like a "counterparty" that they can make money off of….

Neil Weinberg, former Editor in Chief of American Banker Mag puts it into his own words in this OCT 18, 2013 article in American Banker Magazine:

“Financial Advisor Chicanery: Imagine a two-tiered health care system in which some doctors were legally obligated to do what's right for their patients and others, like snake-oil salesmen of yore, could recommend whatever treatments made them the most money, as long as they didn't kill patients outright.”

“Now imagine that the shysters did all they could to blend in with the real doctors. That's effectively the type of system we have today among the people Americans count on to tell them how to invest their life's savings. Registered investment advisors must, by law, put clients' interests first. Many thousands of other "advisors" at places like Morgan Stanley, Merrill Lynch and smaller shops are held to a much lower "suitability" standard.”

“In essence, even though these people often refer to themselves as "financial advisors" or by some other comfort-inducing title, they're really glorified salesmen. Some do a great job serving their clients. Others don't. It's up to them. Under the law, as long as they avoid putting an 85-year-old widow into an exotic derivative with a 20-year lockup, they're bulletproof.”

“Few clients know this fiduciary-suitability gap exists. The suitability crowd has worked tirelessly to keep the standard low and the distinctions murky. The cost to the public is incalculable but huge.” Full article is found here: ... 940-1.html (note 404: Page not found is an example of media “cleansing” of articles truthful or critical of financial industry practices)

Wall Street Journal
"...Most people do not realize that financial advisers (also known as financial planners, financial consultants, investment counselors, money managers, portfolio managers, wealth managers and other names) come in two flavours." ... d-brokers/


CFA Peter Benedek reviews "Is Your Advisor Deceiving You?"
"The professional who is willing to violate his own duty of loyalty and care to his clients is "placing an obstacle before the blind". ... e-16-2014/


Ron Rhoades Asst. Professor, Program Chair, Financial Planning Program, Alfred State College, Alfred, NY;
"I believe that holding yourself out as a trusted advisor, and not accepting fiduciary status and its burdens and restraints upon conduct, is tantamount to fraud." ... lieve.html


Make advisors work for investors, Financial Post
"Anything else is fraud, because the seller is delivering a service different from what the consumer thinks he or she is buying. "

Edward Waitzer article, Financial Post · Tuesday, Feb. 15, 2011) (Mr. Waitzer is a Bay Street Lawyer and former Securities Commission chair, and this quote ( by another person) appeared in his article.


Jul 5, 2012 INVESTING Wall Street Journal
Should You Go to an Adviser or an Advisor?

Associated Press The New York Stock Exchange
Long ago, investors bought stocks from "customer's men," who then became "registered representatives," who in turn morphed into "investment adviser representatives." Financial planners, meanwhile, became "financial advisers" and even "wealth managers."

Much like garbagemen rechristening themselves "sanitation engineers," the folks who flog investments are tweaking their titles to make what they do seem fancier and more impressive than it is.
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Re: Broker/Advisor Disguise and Deception

Postby admin » Fri Apr 19, 2019 9:49 am

This information is the essential “withholding” which prevents investors from knowing who and what they are dealing with. The dealing representative is the "commission sales guy” with 90 days experience...while the “Advising representative” is higher educated, which typically takes years, must have 48 months investment management experience, and both of these usually take a decade.

Proficiency Requirements for Registration

Screen Shot 2019-04-19 at 10.56.30 AM.png

Mutual fund dealer – dealing representative: the individual has passed - Canadian Investment Funds Course Exam
- Canadian Securities Course Exam
- Investment Funds in Canada Course Exam.
- Or the individual has earned a CFA Charter and has gained 12 months of relevant securities industry experience in the 36-month period before applying for registration.

Investment dealer - dealing representative: individual has passed
- Canadian Securities Course Exam
- Conduct and Practices Handbook Course and the 90-day training program.
Scholarship plan dealer – dealing representative: the individual has passed - The Sales Representative Proficiency Exam.
Exempt market dealer – dealing representative: the individual has passed
- Canadian Securities Course Exam
- Exempt Market Products Exam
- Or the individual has earned a CFA Charter and has gained 12 months of relevant
securities industry experience in the 36-month period before applying for registration.

Portfolio manager – advising representative: the individual has earned
- CFA Charter and has gained 12 months of relevant investment management
experience in the 36-month period before applying for registration
- Or the individual has received the Canadian Investment Manager designation and
has gained 48 months of relevant investment management experience.
o 12 months of which was gained in the 36-month period before applying for

Portfolio manager – associate advising representative: the individual has completed
- Level 1 of the Chartered Financial Analyst program and has gained 24 months of
relevant investment management experience.
- Or the individual has received the Canadian Investment Manager designation and
has gained 24 months of relevant investment management experience.

*Please see CSA Staff Notice 31-332 Relevant Investment Management Experience for Advising Representatives and Associate Advising Representatives of Portfolio Managers for examples of what is considered relevant investment management experience.

SOURCE: ... ements.pdf

Industry experience tells me that in the requirements above, it takes an average participant five to ten years or working in the business prior to attaining the CFA designation, or similar to obtain the Canadian Investment Manager qualifications. (this author obtained ASSOCIATE PORTFOLIO MANAGER (one step removed from PORTFOLIO MANAGER) designation after perhaps 10 years work and courses within RBC.)
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Re: Broker/Advisor Disguise and Deception

Postby admin » Thu Feb 21, 2019 3:34 pm

Screen Shot 2018-04-02 at 10.29.40 PM.jpg

Begin forwarded message:

From: CSA ACVM Secretariat <>
Date: February 21, 2019 at 3:16:57 PM EST
To: ‘K (name and e-mail removed)
Subject: RE: Question on registration

Mr. K,

In response to your query, National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (“NI 31-103”) sets out the categories of registration for firms and individuals. Dealing representative is the category of registration for an individual who is required to act on behalf of a firm registered in a dealer category. All IIROC firms are registered in a dealer category (Investment Dealer). As such all individuals who are acting on behalf of an IIROC firm would be registered as a dealing representative under NI 31-103.

Dealing representative is the category of registration for an individual who is required to act on behalf of a firm registered in a dealer category.
(Relevant bold and quoted portions were highlighted by investor-advocates to highlight the pertinent info)

“Registered Representative” is a status assigned by IIROC to individuals employed by IIROC member firms. Looking at the IIROC website, IIROC’s rules describe a registered representative as an employee or agent of an investment dealer who is approved by IIROC to trade and advise in securities with the public in Canada. The proficiency requirements for Registered Representatives (RR) vary according to the Products and/or Customer types that the RR deals with. By definition, an RR is acting on behalf of a firm registered in a dealer category.

By definition, an RR is acting on behalf of a firm
(Relevant quoted portions repeated by investor-advocates to highlight the pertinent)
As such, a registered representative will be registered as a dealing representative under NI 31-103.

a registered representative will be registered as a dealing representative
(Relevant quoted portions repeated by investor-advocates to highlight the pertinent)

CSA Secretariat

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Autorités canadiennes en valeurs mobilières / Canadian Securities Administrators

(514) 864-9510

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Re: Broker/Advisor Disguise and Deception

Postby admin » Thu Nov 29, 2018 9:49 pm

I received this response from the OSC today, in answer to questions about some investment sales agents (registered Dealing Representatives, not Advising Representatives) who were advertising themselves as “Advisors”, "Portfolio Managers”, and “First Vice presidents”, all of which are bogus marketing titles. (adviser is legally spelled “advisER” in law)

The reply from the OSC was professional and informed. I was pleasantly surprised and even a bit embarrassed by some of my former rants about regulators. I may have tarred all regulators with the same brush, when in fact it is only those “team players” at the top who tarnish the entire system. Anyway this reply was thoughtful and factual and of value to the public, so I will share it here. (now if only they would actually apply the law and the rules.....:)

Here is the informative reply and behind it was my question posed to the OSC, in case you are interested:
I have placed in bold, and underlined, some of the more pertinent answers given by the OSC so that they may be more easily spotted by those who need to find the most important info quickly.
On Nov 29, 2018, at 2:02 PM, wrote:
Dear Mr. Elford:

Thank you for your email to the Ontario Securities Commission (OSC). You are concerned about individuals in the investment industry who you believe are misrepresenting their registration categories to give investors a false sense of trust.

You wrote that you recently noticed a financial team at CIBC promoting themselves on TV, radio, and web sites as if they were advisors, Senior Vice Presidents, and also Portfolio Managers.

You specifically refer to two individuals who are registered with CIBC Wood Gundy, which is a business name used by CIBC World Markets Inc. (CIBC WM). CIBC WM is registered in the category of Investment Dealer. As I believe you are aware, Investment Dealers are directly regulated by the Investment Industry Regulatory Organization of Canada (IIROC), a recognised self-regulatory organisation (SRO).

All individuals who are trading, and who are sponsored by firms registered as Investment Dealer, are registered in the category of "Dealing Representative". This is what you see when you look at the CSA website for categories of registration.

As mentioned in previous correspondence to you on this topic, the term Adviser is used in Ontario securities law to describe companies or individuals registered only to give advice about securities. The term “advisor” is not defined in Ontario securities law. The most common Adviser registration category is Portfolio Manager. Portfolio managers typically handle all the investment decisions for an individual’s portfolio, but they cannot carry out trades. All related trading activity based on the PM’s decisions would typically be carried out by an investment dealer.

Portfolio Manager
Apart from the adviser registration category described above, portfolio manager is also an IIROC registration category and refers to registered representatives who have been approved for managing investment portfolios through discretionary authority provided by their clients.

For your reference, IIROC provides a list of IIROC approval categories on their website at this link: ... egories%22

Senior Vice President
This title is not a registration category.
Many companies provide corporate titles that are separate from their registration categories.

What Investors Need to Know
We have also mentioned to you in the past that business titles, designations for courses completed, and professional memberships may be informative, but for investors the important thing to know is the person's registration category. Regardless of a person’s business title or job description, their registration category will tell you what products they are permitted to trade or advise about, and the services they are allowed to provide. It is important to check registration with the appropriate securities regulator or SRO, or on the CSA website. For the individuals you’ve listed the appropriate SRO is IIROC.

You may wish to refer to a response I sent to you on this subject in an email dated May 11, 2015. My former colleague, Jeffrey Fennell, also corresponded with you on this topic, on several occasions. His most recent response was dated June 3, 2011.

You may wish to contact IIROC, if you have further queries about the titles given to registered individuals that it directly regulates. Their contact information is available at this link:


Nicole Plotkin
Senior Inquiries Officer
Ontario Securities Commission


Larry Elford email to the OSC Inquiries:
Date: November 28, 2018 05:10 PM

Subject: An inquiry to the OSC regarding title and registration representation rules and/or what constitutes misrepresentation of titles, job functions and registration categories (Vice President etc)

Dear OSC. I am concerned about persons in the investment industry who misrepresent their registration categories to give investors a false sense of trust.

I have recently noticed a financial team at CIBC heavily promoting themselves on TV, radio and web sites as if they were “advisors”, “Senior Vice Presidents” and also “Portfolio Managers”.

The CSA registration search shows them registered as “Dealing Representatives”, and I am confused as to how these other titles are allowed to be used. I am familiar with the representation rules (Ontario Securities Act sec 44) which seem quite clear about what constitutes representation or misrepresentation.

I am also inquiring about whether or not there are any “exemptive relief” decisions at the OSC on use of the title “Portfolio Manager”? I seem to recall seeing such exemptions in the past and I wonder if that might be the reason that a few persons are beginning to refer to themselves by this title.

Perhaps you could help me to better understand what, if any requirements there are in order to call oneself an “Advisor”, an “Adviser”, a “Portfolio Manager”, or a “Vice President, First Vice President” etc?

Here are the screen images for the specific team that brought this issue to my attention, however I have noticed groups at Richardson also using the “Portfolio Manager” terminology. Thank you for shining a light into any of my questions so that I can become more informed and understand what is being allowed to happen to investors.

Larry Elford
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Re: Broker/Advisor Disguise and Deception

Postby admin » Mon Oct 08, 2018 9:42 pm

A recent article about the poor behavior of Primerica’s mutual fund sales tactics prompted me to check the license and registration search for a number of firms like this one (not sure if Primerica is truly deserving of being called a “firm”, but bear wth me..)

Here is what I found:

Primerica shows up with 6785 total registrants and 6784 “Dealing Representatives (salespersons).
This means that there is ONE person at Primerica who holds the correct license to call themselves an adviser...??

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SUN LIFE is found to have 3450 registrants at the firm in ALL registration categories, and only 20 records found in the category legally allowed to refer to themselves as “Adviser”. I do notice that Sun pretends to dodge the legal ‘representation’ requirements found in Provincial Securities Acts with a clever “vowel movement” or portraying their sales force as “advisORS” instead of “advisERS”. This is still a violation, but it seems to help the regulators think that the public will never figure out the fraud...

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Jumping over the the banks, where the real money is handled in Canada (although the insurance companies are no slouches) we begin with National Bank with 4117 persons registered with the Canadian Securities Administrators (CSA) and twelve (12) are shown to have an Advising Representative registration.

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Next lets peek at one of Canada’s biggest mutual fund manufacturers and sellers, Investors Group. A CSA search turns up a total of 4030 persons today, at Investors, and 3976 of those listed as “Dealing Representatives”.

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Sadly, what the regulators are missing (or are paid to miss?) is that this is a bit like finding out that the College of Physicians and Surgeons is letting 3976 medical industry pill salespersons, falsely represent themselves to the public as if they were “Doctors”.
Imagine how many pills one could sell if all your customers thought you were working under a “Do No Harm” protective duty or care, while truly you were working to get a new condo...THAT is the standard daily practice of most agents/employees of the giant financial firms, and the regulators appear well paid to ignore the ruse...

Jumping to a “top five” bank, CIBC, they show a total of 10585 registrants at the CSA, 95 of which appear in a search for “Advising Reps”.

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TD shows 29025 registrants, with 893 having the “Advising Rep” registration, although the search shows that many of those do not work within TD at all, but merely use TD as a conduit, a “correspondent network”, or as a “back office” to handle trades, statement generation or other office details to persons who work elsewhere or who work independently. The following screen image capture illustrates the smorgasbord of company names who show up under a search within TD:

Screen Shot 2018-10-08 at 11.09.02 PM.png

I will stop there for now, to not overload this posting, and hope that it might someday be of help to people who are concerned about their money, and wish to learn how easy it is to ‘game’ the system and the regulators. To be continued....
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Re: Broker/Advisor Disguise and Deception

Postby admin » Thu Sep 27, 2018 4:48 pm

Dear #FINA, (Parliamentary Finance Committee)

Canadians are being looted with “purchased” regulator help:

On Sept 18, 2009, the CSA helped deceive Canada when they changed the registration name of ALL “salespersons” in Canada, to the less revealing nomenclature “dealing representatives”

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In the following CSA document from Sept 18, 2009, the license and registration categories of EVERY registered “SALESPERSON” in the Canadian investment industry (brokers mutual fund sellers, insurance fund sellers etc., etc) was secretly altered to the NEW name of “Dealing Representative”.

This had the effect of confusion for any investor, and assistance to investment dealers who wish to purport to the public that their hundred thousand “salespersons” were something more professional, and have a higher duty of care to protect the public. This is a title deception worth hundreds of billions to banks and other investment product sellers...and hundreds of billions in harms to an un-informed and unsuspecting public. When the deception is intentionally and secretly done, it carries the stamp of malevolence.

The CSA is the umbrella organization of the 13 provincial and territorial Securities Commissions, and is 100% industry funded. (and influenced)

This had the effect of using government sanctioned regulators to usurp the public protective mandate of these gov empowers agencies, and to sell out the public. It has succeeded. In January of 2018, the CSA succeeded in deletion of ALL remaining descriptive use of the word “salesperson” in all web sites and Securities Commission material, making it literally impossible for a member of the public to learn what their investment representative is registered as, or more accurately, what that registration truly means for their well being.

All of this internal dealings and secretive deceptions of the public surrounded the CSA and other “stakeholders” creating something called the CRM and CRM2, which is the term for new “client relationship models” promised to better inform the public of the client relationship (while they were actually doing exactly the opposite), and also promise to inform the public about all the fees and costs that the public pays. They deceptively left out any “internal” (management fees inside company-branded products etc) so investors are ONLY told of the costs they pay their “advisor” (fake advisor, dealing rep license...sheesh) and clients are kept in the dark about the internal fees of some of the products they “invest” in.


OSC 2009 SALESPERSON ADVISOR SWITCH.pdf found here on the web ... lement.pdf

if deleted (a standard practice of the CSA) also found here
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Re: Broker/Advisor Disguise and Deception

Postby admin » Fri Jul 27, 2018 2:51 am

the trick of fooling hundreds of millions of investors into fooling that they are easier to dupe, and to take advantage of financially.

A couple of public info items were brought to light this week, further shining light into what I find to be the world’s greatest mind trick...the trick of fooling hundreds of millions of investors into fooling that they are easier to dupe, and to take advantage of financially. I will begin on sharing a real life example that has also come to my this week, but for now, lets give you just two pieces of light, with which to shine into your own financial goes:

#1 is this newspaper article, linked and pasted below

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None of Grande Prairie’s financial advisers are what they appear to be, according to investor advocate Larry Elford.

Out of all the financial professionals in the city, not one is actually a registered adviser with a fiduciary duty to act in the best interests of clients, Elford said. Instead, they are all registered as dealing representatives – or salespeople.

Many go by the title “advisor,” spelled with an “-or” instead of an “-er.” This is done to mislead clients into thinking that salespeople are something other than salespeople, Elford said. Under the Securities Act in Alberta and other provinces, individuals cannot act as “advisers,” spelled with an “-er,” unless they’re registered as such.

“That’s what I found when I went to Grande Prairie, is everybody who’s in the sales business who’s licenced as a dealing rep – someone who represents the dealer, not the customer – those people say ‘trust me, I’m an advisor.’”

Elford said this deception is “the standard industry practice” across the country.

A search on the Canadian Securities Administrators (CSA) website,, shows there are currently about 116,000 people in Canada registered as “dealing representatives” and only about 4,300 registered as “advisers” or “advising representatives.” Those 116,000 are not representing themselves as salespeople or dealing reps, but as advisors or planners, Elford said.

Elford, who lives in Lethbridge, is a former RBC investment manager who analyzes the financial industry. Last year, he testified before the House of Commons Finance Committee, which held hearings on consumer oversight and protection within Canada’s banking sector.

Elford said that over the last two years, during visits to Grande Prairie, he has checked the credentials of each financial professional in the city on the CSA website.

Elford added that many financial professionals don’t even realize they’re registered as salespeople rather than advisers.

“I had no idea what my registration category was,” he said. “I trusted my bank to be honest with me in what I was licenced as.

“I never held a copy of my licence in my hands, because the dealer always takes care of that, whether you’re with a bank or an investors group or Sun Life or whatever.”

Jeremiah Richardson, financial planner with Discovery Financial, agrees that more oversight is needed.

“You can call yourself a financial planner, you can call yourself an estate planner, you can call yourself pretty much whatever you want. In my mind, that’s unfair to individuals who are looking for where they can get the best advice.

“In essence, (a planner or advisor) could be someone who came in off the street, didn’t like the job they were in and were promised they’d make a whole bunch of money by managing other individuals’ retirement accounts. These are individuals who potentially have little to no training, expertise and oversight.”

Richardson said one way to tell if people are truly qualified is to “look for extra letters” on their business cards. Richardson is a CFP, or certified financial planner, a designation administered by the Financial Planning Standards Council. Certified planners are expected to act in clients’ best interests and follow a code of ethics, he said.

“If a client has any kind of issues with my practices, whether they’re deceptive or taking advantage of that individual, I could face significant fines, loss of licencing, basically get kicked out of the industry.”

About 17,000 financial professionals across Canada are CFPs.


#2 is this 5 minute video which tries to explain the self deceiving mind trick in terms I hope will make more people see the magic...

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Thanks for watching! Please share this link with anyone you know, love or wish to help better understand how the financial industry may have a fraudulent Svengali-like hold upon their money. Join me on twitter @RecoveredBroker and on Facebook at the Group called INVESTMENT SYSTEM FRAUD, links below.

Lets make the world a safe place for everyone, not just those who are above the law...

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Re: Broker/Advisor Disguise and Deception

Postby admin » Thu May 03, 2018 10:17 pm

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I was upset enough with just over 3 decades of Conservative Kleptocracy in Alberta during the last election (2015?) and so I even knocked on doors with the NDP candidate in my area, hoping for change.

Well change happened, but when power was obtained and I wrote to the new Alberta Finance minister about our own Alberta Securities Commission (a gov authorized entity under the authority of the Finance Minister) about this regulator having become an industry captured entity, with examples, I was given nearly the identical reply as I had been given by the Kleptocrats.

I am sufficiently shocked at politicians who, upon obtaining power, appear no longer willing to “rock the boat”, and instead willing to allow the public to be harmed rather than their re-election chances to be harmed, shocked enough to seek to place pressure upon them to protect and serve those they promised to serve.

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Re: Broker/Advisor Disguise and Deception

Postby admin » Thu Apr 12, 2018 5:08 pm

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Fair Canada began with funding by the investment industry, with the stated mandate of being a public protective body. However industry experts have long puzzled over whether they are merely another industry con, hiding a bad motive beneath a good facade, or whether their intentions are indeed above board and honorable.

It has been years and years that this suspicion has remained, while they have appeared to say and do meaningful things, but just recently it became evident that their industry funding is clouding or overshadowing truly ethical mandates. Case in point.

A copy is found here. ... -FINAL.pdf

More cynical industry experts informed me that they would not even bother reading the 80 pages and I could not blame them, for truly, is anything meaningful ever gained in 80 pages? Experts learned decades ago that reports needing 80 pages are those reports that need to complicate, confuse and befuddle the truth, and not to reveal it.

This report seems no different, but I did read it, and thankfully they revealed their industry-sided bias by repeating a common industry deception in the FIRST TWO LINES. Here they are:

Executive Summary
Canadian investment firms and their financial services representatives1 (hereinafter referred to as “financial services representatives” or simply “representatives”) serve millions of vulnerable investors, many of whom are older Canadians.

The exact significance of these two lines is this:

Fair Canada is repeating marketing spin and industry platitudes in these two lines which are cleverly and intentionally designed to misinform, mislead and to lead astray any investor who were to read these words and believe them.


Because Fair is caught supporting and maintaining the best kept secret in the investment industry...anywhere. When “fairness, honesty and good faith” would require them to be doing the exact opposite, which would involve revealing, disclosing and explaining how the secret, secretly abuses millions of investors out of billions of dollars.


The secret that Fair helps to hide in these two lines is that there are TWO very distinct kinds of financial advice providers. One is a fraud (when the “advisor” is not legally registered as an “advisor”) and it is usually the commission salesperson, acting on behalf of, and as agent representing the interest of giant investment dealers. This person is usually registered in Canada as a “Dealing Representative” and can be searched online at (keep in mind that the exact category of registration is intentionally made difficult to find,...and that is another bad motive hidden behind a good motive.

The second type of “advice giver” is a true financial professional, usually legally required to act in a “fiduciary” capacity (google it) and someone who CANNOT legally act against the client. THIS is the true investment advice giver, because...well, advice is advice, it is not sales. And sales is sales, and is not advice.

The first fraud is to try and confuse investors to make the mistake of believing that the sales guy is an advice guy....Nope.
The next fraud is to hide the difference between the two types using complication, obfuscation, lying by omission and bullshit jargon. This is what Fair Canada does in the first to lines of their 80 page report on how not to be believing in Fair Canada. They actually perfect the art of complication, obfuscation, lying by omission and bullshit jargon in just two lines. Again I thank them for saving me from having to read 80 pages.

here they are again:

Canadian investment firms and their financial services representatives1 (hereinafter referred to as “financial services representatives” or simply “representatives”) serve millions of vulnerable investors, many of whom are older Canadians.

No human alive (except a malpractice expert:) might read that info from Fair Canada and be able to tell what type of person Fair is referring to, what their license and job description is, and to whom do they owe a legal duty to protect.....and this is by design.

Fair Canada has failed with this industry-talking-line, and for this I thank them. They have cleared up a mystery of whom Fair Canada represents, due to who is paying for their existence. I stand quite prepared to be corrected in time, if other evidence to the contrary presents itself, but for now Bingo! has been called on the Fair Canada smoke and mirror show...

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Re: Broker/Advisor Disguise and Deception

Postby admin » Mon Feb 20, 2017 8:34 pm

Further to WHY FACTS DON’T CHANGE OUR MINDS…New discoveries about the human mind show the limitations of reason.

By Elizabeth Kolbert, The New Yorker ... -our-minds

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How investment broker dealers use sleight of hand to exploit 100 million Americans

‘Card manipulation’ is the branch of magical illusion that deals with creating effects using sleight of hand techniques involving playing cards.

While watching a magician at the Los Angeles Magic Castle, I saw a card manipulation pro do amazing tricks for a five year old girl. She was mystified and certain that what she saw was real and that magic is possible. Absolute wide eyed certainty was on her face. (Effect - how a magic trick is perceived by a spectator)

It reminded me of the schoolteacher I spoke to this week who was concerned about her investments.

Her advisor had put all her investment holdings into a fee-based account, where she was charged 2% each year to ‘manage and advise’ her.

Problem #1 was that she was being told to add 2% to her investment costs, every year. (2% compounded over the long term will cut your retirement funds by half, while putting the other half in the hands of your broker and dealer.

Problem #2 is that she had already bought and paid for all her investments and faced considerable fees and commissions to do so. Not to belabour the point but she had already paid for her investments.

Now the dealer had cleverly devised a totally new way to charge her again. To effectively give themselves on an ‘annuity’ based on every dollar in her account earning them a fee, every day of the year. If this does not meet the definition of abuse of market dominance, I am afraid nothing does.

Problem #3 was that the advisor was faking his license, while cleverly hiding the fact that he held only the salesperson registration, otherwise known as a ‘broker’. This ‘un-prosecutable fraud’ allows commission hungry salespersons to dupe investors by purporting to be licensed fiduciary professionals.



“…financial advisor is generic term that usually refers to a broker By contrast, investment adviser is a legal term.”

These are not insignificant issues and yet they happen to millions of investors, without them being told of the scam.

She opened her computer in her home 1000 miles away and I opened my own. I walked her through the 30 seconds required to find the actual license/registration of her advisor.

I had to do this because without her actually seeing how the trick ‘worked’, something called ‘cognitive dissonance’ (fear of admitting/discovering we are easily fooled) steps in to assure most of us that we are too smart to be tricked so easily.

Most retail investors do not understand the differences between investment advisers and broker-dealers. They are forgiven for being in the dark, because the financial industry deliberately deceives more than 100 million North American investors.

Using sleight of hand, like a card shark or a con artist, the investment advisor of today is allowed to trick over 95% of American investors into a false sense of trust.

Imagine being allowed to lie to investors, in order to gain trust. This is the very same show that the con artist does for a living. Who knew is was standard investment industry practice as well? Who could even imagine? Magicians can. Securities lawyers can. Regulators can. But they are each bound to silence.

This investor was convinced that her advisor was real, that his skills were above her understanding, and that she was only protected if she placed herself and her family money in the hands of the advisor.

The trouble is that the advisor’(salesperson) who advises her on her money did not hold the professional standing adviser license and registration. Wait a minute…didn’t I already say that last line, just a moment ago?

It is time that I helped you spot the distraction. The magic of the con artist, or the magician is to weave a story based upon one or two facts, whilst distracting the audience in subtle and clever ways.

The distraction, performed in over 100 Million bank/broker/dealer accounts [1]

First, hide ones true license or registration from the customer, so they do not find out that you are a salesperson on commission.
Second change the title that you use by one letter, from the legally-meaning term “adviser”, to “advisor”.

That one clever ‘vowel movement’ allows a million commission sellers of stocks, insurance and mutual fund products to pretend to be SEC or state registered ‘advisers’.

It would be like having a career as a pharmaceutical company drug sales rep, and figuring out that one can easily triple sales if I portray myself as a Doctor. I gain greater trust, and more money by lying to my clients. Welcome to the standard daily practice of the 'self' regulated investment industry. See

One has a ‘do no harm’ oath, and the other sells products for commission. One charges approximately 1% and the fee is not subject to sales motivations or product incentives. One must work (by law) for the betterment of the client, and the other works (agency duty undisclosed) for the betterment of the dealer.

Train yourself to learn these key differences and how to spot the ‘trick’ being played on you, and one hundred million other Americans.

Product selling is not advice, and advice does not involve product selling. It is a clever hiding, of the agency duty, the duty to protect, serve and care for the customer, and hiding that a salesperson does not have this same duty to protect you. You are at the mercy of the #1 con in North America, while you are convinced that you are being served by a true professional. Do not feel bad. As I write this perhaps only 100 people in America even believe what I am saying, such is the power of a good con, to cause the victim to mentally ‘lock-in’ the impossibility of him or her being duped. That goes into a topic called ‘cognitive dissonance’.

For 600,000 commission sales brokers. (The million number mentioned above also includes insurance and mutual fund registrants, many of whom operate outside the boundaries of FINRA)

After all, they work for a trusted financial firm, and they call themselves ‘advisor’. Isn’t it safe to assume that our government would not allow consumers to be lied to with such cleverness. Not it is not safe at all. Perhaps it was during the last century, but those days are gone.

Here are some of the links and backstory details for anyone who would like to dig a bit deeper. I hope that some readers will make a careful exploration of this material, and will contact me at (in Canada) if you would like to correct anything here that needs correcting. I would be grateful for those who help me to better understand what I think to be the most costly consumer ‘bait and switch’ scam in the world today.

"When FINRA changed its name from the perfectly accurately descriptive “National Association of Securities Dealers” to the “Financial Industry Regulatory Authority,” many of us suspected that they had a pretty obvious agenda. The brokerage industry self-regulatory organization wanted to position itself as a regulator of everybody, including all fee-only fiduciaries, so it could impose a thousand paperwork-related obstacles to their business health and eventually put this silly idea of working for the customer to rest for good."
Bob Veres

Bob Veres, a Financial Planning columnist in San Diego, is publisher of Inside Information, an information service for financial advisers. Follow him on Twitter at @BobVeres.


Everything below this point is a bit of a ‘reference source’ for my own use and as a ‘curator’ site to keep track of the related material. Read it at risk of being bored to death, and seeing me make notes and reminders to myself. My curator mind is not what it once was and I get deep enough into these stories at times to become quite lost. These notes are my signposts.


Many legally registered ‘advisers’ in the USA, also hold a broker license, which means they hold two different registrations, with two dramatically different duties to protect you the investor.

If you can imagine the comparison, it would be like working with a medical Doctor who was also licensed (and paid) as a pharmaceutical sales representative. They would have two invisible professional ‘hats’ so to speak, and they could switch hats back and forth while dealing with you depending upon whether it was in their financial interests to do so. That is a risk taken with the dually registered ‘broker-adviser’. Here is a video by Tony Robbins explaining in a couple of minutes how that might work against you financially. (OOPS! Video lost, please notify me if anyone can spot the location of an interview Tony did talking about financial persons who hold two difference license/registration categories, as he sums it up pretty well)

Ultimately it is this simple (according to Tony Robbins in the first 23 seconds of this video clip) If you have a fiduciary you pay the cost of money management ONLY. If not you pay commissions ON TOP of the cost of the money management. (The difference will cut your retirement by about half)

========================From US NEWS

Put another way, the question is not whether the dual-licensed broker-dealers are adequately regulated when they act as salespeople, but whether they are adequately regulated when they act as advisers. They get to have their cake and to eat it too. Those who claim to be ‘advisors’ get to eat your cake without even having the license they are claiming.....without even having the professional right to be in the room, so to speak. Hmmm.

What’s at stake, then, is not whether some clients will be able to get advice, but whether some financial professionals will be allowed to profit by giving bad, self-serving, advice. And there is abundant evidence of misrepresentation and obfuscation under the current rules.

In today’s world, workers and retirees face investment decisions that are, at once, deeply confusing and crucially important. In the absence of fiduciary standards, many people will put their trust in salespeople masquerading as trustworthy financial advisors. And many will make huge mistakes as a result – mistakes that can cost tens or even hundreds of thousands of dollars over a lifetime.

When retail investors seek advice from a financial professional, they generally assume that the professional is acting on their behalf. It makes no sense to insist that some professionals live up to that expectation, while letting others exploit it. ... retirement

Advisor has an ‘o’ in it, which should remind you “Uh Oh…somethings wrong”, or simply NO!

Adviser has an ‘e’, which should remind you of the words, “Legal”, “Excellent!”, or simply “YES!”




======== Below this point are links, sources of additional reading for those who wish to dig a little bit deeper into this topic=======

Investment Advisers: An investment adviser is a fiduciary whose duty is to serve the best interests of its clients, including an obligation not to subordinate clients’ interests to its own. (please note that the law in the U.S. and in Canada specifies this term as spelled with ‘er’ at the end)

This is the type of person you have looking after your money, if you have institutional money or are a serious retail investor.

Over 11,000 investment advisers are registered with the State or Securities Exchange Commission (SEC).
As of September 30, 2010, Commission-registered advisers managed more than $38 trillion for more than 14 million clients.

$38 Trillion dollars invested at less than 1% in professional (fiduciary) management expenses, adds up to about $380 billion in investment costs being paid to manage that dollar figure.

(probably will be much less than 1% overall, I have seen institutional money management costs as low as 0.25% on the large accounts) (in the billions)


As of the end of 2009, FINRA-registered broker-dealers held over 109 million retail and institutional accounts. That is almost ten times more investors than have the benefit of a truly licensed professional money manager. (adviser)

These poor retail, mom and pop investors end up with a sales guy, putting on a facade of a professional money manager, adding 2% to 4% additional fees to the costs of whatever investments you own, while STILL having to have the 1% costs of a real professional money manager. I standby waiting to be proven wrong in this point. THIS is the retail investment industry whirlpool that I was caught in for two decades.


It seems that the SEC cannot say (print, speak, warn, publish) the word “Advisor” since it legally does not exist. (there may also be other reasons) Sure you can go and look it up in the dictionary….and convince yourself that it means the exact same thing no matter how you spell it…..but please consider the possibility that the Securities industry has lawyers who have an entirely different view. (or simply insert your own cognitive dissonance here)

I talk to hundreds of industry experts each year, and can count on the fingers of my two hands how many of them are not caught in this cognitive dissonance. Caught in the ‘Effect’ of the con.

The existing securities regulatory scheme that allows broker-dealers to conceal their sales roles, does not offer adequate investor protection when dealing with broker-dealers, since under a suitability standard they generally remain free to put their own interests ahead of those of their customers. They do this part (the concealment) in any magician would.

Investors do not distinguish between broker-dealers and investment advisers, do not know that broker-dealers and investment advisers are subject to different legal standards, do not understand the differences between a suitability standard and a fiduciary duty.

This is the natural result of regulatory policy that has allowed brokers to rebrand themselves as advisers without being regulated as advisers.

As the SEC staff stated in the 913 Study, “Retail investors are relying on their financial professional to assist them with some of the most important decisions of their lives. Investors have a reasonable expectation that the advice that they are receiving is in their best interest. They should not have to parse through legal distinctions to determine whether the advice they receive was provided in accordance with their expectations.”

Broker-dealers who wish to avoid regulation under the Advisers Act could do so by limiting themselves to transaction-specific recommendations while avoiding holding themselves out as advisers or as providing advisory services. In order to ensure clear communication to investors, it may also be necessary for the Commission to require some sort of affirmative disclosure in such circumstances to the effect that the broker-dealer is acting solely as a salesperson and not as an objective adviser. Broker-dealers who complied with these conditions would in effect have a safe harbour from Advisers Act regulation.

Brokerage firms would then face a clear business decision: do the benefits of offering advisory services and marketing themselves accordingly outweigh the costs of regulation under the Advisers Act? Faced with a similar decision when the courts determined that fee-based accounts were advisory accounts, most broker-dealers chose to accept regulation under the Advisers Act.

Investors would also benefit even if certain broker-dealers chose to avoid Advisers Act regulation if the result was that those broker-dealers stopped characterizing their services as advisory services when making recommendations that are not required to promote the best interests of the customer.

This approach would also preserve investors’ ability to choose to receive transaction-based advice subject to a fiduciary duty or non-advisory transaction-based services subject to a suitability standard, and their ability to distinguish between those different types of services would be enhanced.

An important aspect of a broker-dealer’s duty of fair dealing is the suitability obligation, which generally requires a broker-dealer to make recommendations that are consistent with the interests of its customer.


FINRA has primary responsibility for examining broker-dealers. (Financial Industry Regulatory Authority)

For my money FINRA should more accurately be titled FISRA (Financial Industry Self-Regulatory Authority)

Broker-Dealers: The Commission and FINRA oversee approximately 5,100 broker-dealers. (160,000-plus branch offices exist beneath this network of broker-dealers)

As of the end of 2009, FINRA-registered broker-dealers held over 109 million retail and institutional accounts. Approximately 18% of FINRA-registered broker-dealers also are registered as investment advisers with the Commission or a state. Most broker-dealers receive transaction-based compensation.

Retail investors are over 95% more likely to be funnelled into the ‘chute’ of the facade ‘advisor’ than to obtain the services of a licensed professional adviser.


Investment Advisers (FINRA)
"Although most people would use an "o," we purposely spell adviser with an "e" when we talk about investment advisers. That’s because the laws that govern this type of investment professional spell the title this way.” (quote by FINRA about the legality of “adviser”....while they regulate ‘brokers’ only...who represent themselves as ‘advisors’....which has no legal standing anywhere.....but hey, self regulation is great)

Many investment advisers are also brokers—but these two types of investment professional aren’t the same.


160,000-plus branch offices of broker-dealers vs advisory firms (11,100) fifteen times as many broker offices as adviser

nearly 90 percent of investment adviser representatives are dually registered as brokers. (don’t even get me started on the potential for dual-personalities problems....)

FINRA’s market surveillance systems process approximately 50 billion market events on average each day ... nterprises


“160,000-plus branch offices of broker-dealers” ... moY5m.mjjo


Thankfully, Michael Kites can say the word “advisor” with some context about how it is used in US retail investment circles:

If the broker’s investment advice was “solely incidental” to the implementation of brokerage services, the broker didn’t have to register.

Notably, though, the ’40 Act actually did not directly impose a fiduciary duty on such investment advisers. Technically, Section 206 of the Act – also known as the “anti-fraud” provision – merely requires that investment advisers not engage in any acts that are fraudulent, deceptive, or manipulative. It was only later, in the 1963 Supreme Court case of SEC v. Capital Gains Research Bureau, Inc., that these provisions were interpreted to mean that investment advisers owed a fiduciary duty to their clients.

THEREFORE, IF A BROKER STAYS UNDER THE RADAR BY CLAIMING THAT HIS OR HER INVESTMENT ADVICE IS “SOLELY INCIDENTAL” TO THE TRADE…(which may have been the case in the last century)..THEY CAN IN EFFECT BE “EXEMPT” FROM THE REQUIREMENT that investment advisers not engage in any acts that are fraudulent, deceptive, or manipulative.

Over the next 20 years, the scope of brokers providing advice expanded even further, and in an effort to cut down on brokerage industry conflicts of interest the SEC-directed 1995 Tully Committee on Compensation Practices recommended that brokers begin to shift compensation towards ongoing AUM fees, leading the SEC in 1999 to propose the now-infamous rule for “Certain Broker-Dealers Deemed Not To Be Investment Advisers” (finalized in 2005). This so-called “Merrill Lynch” rule would have allowed brokers to offer fee-based accounts – otherwise a form of “special compensation” – but without being required to register as investment advisers, as long as any advice they gave was still solely incidental to the brokerage services and the account was disclosed to be a brokerage and not advisory account.

THIS RULE ALLOWS BROKER DEALERS TO PUSH FEE BASED AND PROPRIETARY (HOUSE BRAND) PRODUCTS but without being required to register as investment advisers.

Michael explains it best how people have snuck up, on the advisor gambit…. ... t-of-1940/


You would think the “incidental advice” rule in the 40 Act would be enough for the SEC to solve the dilemma of the fiduciary standard, a controversy stemming from the fact non-Registered Investment Advisers are allowed to skirt registration by calling themselves “advisors.”

the SEC hasn’t enforced its own rule regarding the provision of investment advice.

For want of a single vowel, the broker industry appears to have seized upon the Holy Grail of loopholes.

By referring to themselves as “advisors” rather than “advisers,” they have duped the SEC into believing their bread-and-butter business is merely “incidental” to their standard business model. ... 29365276cb


Second, enforce the 40 Act’s incidental advice rule and stop allowing brokers to call themselves “advisors,” or worse yet, “advisers.” 

Clearly a person calling themselves an “advisor” is directly, overtly, and purposefully providing advice; it is not ancillary or “incidental” to providing other services.

The public is confused by who is a fiduciary and who isn’t (whether they know or understand the term is not the issue – they do intuitively understand the concept).
This is understandable, since the SEC allows anyone with a brokerage or insurance license to call themselves an “advisor.” How can the public possibly know that their “advisor” is really less an adviser and more a salesman working first for the employer who pays them based on the advice they give.
They do have a fiduciary obligation, but as an agent of the brokerage firm this obligation is to their employer! This is not tough stuff. It is something the SEC could do tomorrow. ... gn=121715z

====== ... -advisors/

This one simple step has the potential to deliver large benefits to retirees and investors. It is also, very plainly, the right thing to do. When retail investors seek advice from a financial professional, they generally assume that the professional is acting on their behalf.
It makes no sense to insist that some professionals live up to that expectation, while letting others exploit it.

When Salespeople Call Themselves Advisors
Updated rules are needed to prevent financial professionals from swindling ordinary Americans.

Saving for retirement is extra-hard these days, and not just because wages are low and millions of Americans are still struggling to make up for ground lost after the 2008 financial crisis. All too often, the difficulty is compounded by gaps in the rules for the financial professionals who provide retirement-planning advice.

As things now stand, too many of those professionals can present themselves as (and enjoy the benefits of being perceived as) advisors with your best interests in mind, yet go ahead and recommend investments that will generate more money for them, and less for you.

It’s a huge problem, and the Securities and Exchange Commission and the Department of Labor are each in a position to fix important pieces of it. The SEC’s part goes back to a 1940 law which gave registered investment advisors a fiduciary duty to look out for the best interests of those they serve, while treating broker-dealers as salespeople with only a looser obligation to recommend “suitable” investments. The Labor Department entered the picture in 1974, when the Employee Retirement Income Security Act authorized it to regulate employer-sponsored retirement plans and some of the professionals who help people make decisions related to those plans.

Nowadays, brokers frequently act as advisors, providing “investment planning” or “retirement planning” expertise; yet the SEC continues to define and regulate them as salespeople. The Labor Department sets a stricter standard for some forms of advice, but its rules, which have not been updated in 40 years, are narrow, excluding many of the situations that matter most, such as advice given to employees about what to do with their 401(k) money when they retire or change jobs. Far too often, the record shows, financial professionals take advantage of the wiggle room between perception and regulation to promote high-commission investment products over alternatives with lower fees, better returns or fewer risks.


FINRA also refers to advisers only with an “E”, and brokers are the only other registration category.

There is no legally meaningful term for advisor, other than to intentionally mislead investors into a false trust.

even ... providers/ cannot say the word “advisor”

And yet over 100 million American investors deal with something which is often called an “Advisor”. Why is that? WHAT is that?

What I really would like to know is how does any industry ‘regulator’ (an impartial referee) come to have $2.3 Billion Dollars in the bank???


Click on image to enlage or zoom in

source doc, ... IR_AFR.pdf

page Nine of FINRA 2015 Year in Review and Annual Financial Report

FINRA Newsroom shows that they regulate over 635,000 brokers at 3,900 securities firms

These people are salespersons, almost always selling on a commission ... 1487645225 testimony to congress

============== ... Report.pdf

Financial Advisor or Investment Salesperson? Brokers and Insurers Want to Have it Both Ways ... -ways.html

Of course the financial industry is the new deception industry....the ‘tobacco’ of the 21st Century.
Larry Elford


Current State of the Investment Adviser and Broker-Dealer Industries

[/size]Investment Advisers: Over 11,000 investment advisers are registered with the Securities Commission. As of September 30, 2010, Commission-registered advisers managed more than $38 trillion for more than 14 million clients. In addition, there are more than 275,000 state-registered investment adviser representatives and more than 15,000 state- registered investment advisers. Approximately 5% of Commission-registered investment advisers are also registered as broker-dealers, and 22% have a related person that is a broker-dealer. Additionally, approximately 88% of investment adviser representatives are also registered representatives of broker-dealers. A majority of Commission- registered investment advisers reported that over half of their assets under management related to the accounts of individual clients. Most investment advisers charge their clients fees based on the percentage of assets under management, while others may charge hourly or fixed rates.

Broker-Dealers: The Commission and FINRA oversee approximately 5,100 broker-dealers. As of the end of 2009, FINRA-registered broker-dealers held over 109 million retail and institutional accounts. Approximately 18% of FINRA-registered broker-dealers also are registered as investment advisers with the Commission or a state. Most broker-dealers receive transaction-based compensation.

Investment Advisers: An investment adviser is a fiduciary whose duty is to serve the best interests of its clients, including an obligation not to subordinate clients’ interests to its own. Included in the fiduciary standard are the duties of loyalty and care. An adviser that has a material conflict of interest must either eliminate that conflict or fully disclose to its clients all material facts relating to the conflict.

Today, the more than 11,000 advisers registered with the Commission manage more than $38 trillion for more than 14 million individual and institutional clients.

In addition, there are more than 275,000 investment adviser representatives registered in the applicable states and more than 15,000 state-registered investment advisers.

As of the end of 2009, broker-dealers held approximately 110 million customer accounts.10 Currently, the Commission oversees approximately 5,100 broker-dealers11 with over 600,000 registered representatives engaging in a variety of business activities, which may or may not include the provision of personalized investment advice or recommendations about securities to retail customers. 13 Of the 5,100 registered broker-dealer firms, 985 have indicated on Form BD that they engage in, or expect to engage in, investment advisory services constituting one percent or more of their annual revenue.14


A Quick Note on Independent Broker-Dealers
A firm qualifies as a broker-dealer if it trade securities on its own account – that is, for the benefit of the firm itself – and also completes trades on behalf of its customers. Firms that only trade for their customers are simply called brokers and are not considered for this ranking. Among broker-dealers there are two major business models. The first is known as a wirehouse broker-dealer, in which a traditional securities firm offers its own financial products and services to investors. The largest wirehouse broker-dealers include powerhouse names such as Merrill Lynch, Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc.. (NYSE: GS).

Read more: The Top 25 Broker-Dealer Firms for 2016 (LPLA, AMP) | Investopedia ... z4ZOQYCypJ

============== ... ra-license (a good industry-inside resource piece about dual-license registrants...why hold both) Useful for researchers who seek to understand what the industry is doing and why.

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