Prime Time Crime

(Prime Time Crime Nov. 20, 2009)

How to make financial crime pay

By Larry Elford



I received some feedback recently after a speech I gave on, “How To Make Financial Crime Pay”. It prompted me to write the following for the investing public, based on what I learned working over twenty years inside the investment industry.

The feedback referred to the Certified Financial Planning designation as if it were a license or a profession when sadly it is not.  Not yet at least. It is a correspondence course that anyone can take, with no minimum requirements.  It does not replace, improve, or over-rule the fact that nearly every single person calling themselves a CFP, CIM, or CF “anything” is being paid by sales commissions. An “eat what you kill” incentive plan. It might serve to mislead the public, however into believing otherwise and that unfortunately is the intent of some sellers. To mislead. To sell. 

When I worked in the investment industry approximately 100% of persons selling financial products were legally licensed and registered in a category called “salesperson”.  However this name was always cleverly hidden from the public using the many other names financial salesmen call themselves. Some call themselves planners, some advisors, some consultants. Zero called themselves what they were licensed as. Zero referred to themselves by how they were paid. The public should be asking government why this is allowed. All licensed salespersons found methods to avoid using the “saleperson” word. In some circles that is called misrepresentation. In my financial industry this is called “standard industry practice”. Call your MP and MLA and tell them if this is no longer acceptable to your financial health. 

The fact that many industry people might have taken a course, titled Certified Financial Planning, or any one of a thousand such courses anyone can take, has little to do with their license, their practice or their behavior.  I provided industry sales statistics in my speaking presentation that showed how most mutual funds are sold with the highest reward to the salesperson and the greatest penalty to the customer. This is not “advice”, nor is it financial planning. It is not even professional. This is predatory selling under the clever disguise of giving advice. It is also against the law and every code of conduct and industry rule. Again, sadly, this is the standard industry practice so people who should protect end up looking the other way. Having a Certified Financial “anything” course does not change this reality. It just makes misleading the public into parting with their money a bit easier. Many courses are simply used for marketing, to allow a salesman to proclaim a “sort of professional” status while operating totally as a commission product seller.  

To mistake the name of a “course” for a “profession” and to begin calling oneself a “certified financial planner” when ones license with the government says something else, and ones compensation comes from commissions, is just one of many sleight of hand misrepresentations that my speech included that permits financial crime to pay so well.  Using the same logic, should I be calling myself a Doctor, since I took a first aid course? The logic would be yes if we were talking about the investment industry. It would sell better.

Until members of the investment industry display an actual license on the wall in their office, the public will never know whether they are dealing with a salesperson, or a trusted professional advisor, or the brand new name given to nearly all 130,000 formerly licensed “salespersons” in Canada; “dealing representative”. Yes, the securities commission in your province cleverly and quietly just removed all reference to the word “salesperson” on Sept 29 of this year, and replaced it with “dealing representative”. I will let you think through the possible motivations of doing this, and while you are thinking this through, keep in mind that the salaries of each person at the provincial regulator are paid by fees charged to the industry they regulate, the investment industry.

Other developed countries have learned that one cannot both be a trusted professional advisor and a commission salesperson at the same time. Canada is a bit behind and is struggling to have it both ways as long as it possibly can. We have five major banks here who do over 90% of the investment business in the country and they very much enjoy the Canadian way of having your cake and eating it too. 

Larry Elford is a former Chartered Financial Planner, Certified Investment Manager, Fellow of the Canadian Securities Institute and Associate Portfolio Manager, now retired.  He can be contacted at

Prime Time Crime

Contributing 2009