Prime Time Crime

(Prime Time Crime Apr. 05, 2010)

Tricks of the trade

By Larry Elford



Over 90% of investors do not know whether they are dealing with a salesperson, or a trusted professional advisor.  

Why would this be important?  Because the difference in treatment, in product recommendations tends to cut your retirement by half over a long term investment horizon.  While putting the other half in the pocket of your so called “advisor”.

Investment firms in Canada say (in court) that they do not owe a fiduciary duty to customers unless the customer signs over full authority on the account the the firm?

That is a bit of a contradiction to what their advertising promises suggest, but then who plays word games and legal games better than a large financial company when asked to give you a return of your own money if it becomes lost by abusive practices?

Part of the confusion results from intensive advertising campaigns by the financial industry to try and persuade investors that brokers are not salespersons but rather trusted advisors.  Nothing could be further from the truth.

One of the great tricks of the investment trade is that while 130,000 registered persons in Canada were licensed in the capacity of “salesperson”, they did not like to use this particular name.  They preferred to inflate their title up a notch or two, beyond simple sales, to something less accurate like “advisor”. There was more trust generated if customers believe you are an “advisor” than if you honestly inform them of your sales license. 

Perhaps that is why in September of this past year, 2009, all references to “salesperson” were stricken from the securities act in 13 provinces and territories.  These people’s license with each provincial securities commission now say that they are licensed as “dealing representatives”.  You tell me if you can figure out what that means to your money.  Do they owe you a duty of care, or are you going to be preyed upon?  Again.

Transparency is covered by an industry that makes billions based on trickery, on word games.  When push comes to shove and an abused customer goes to court to say that the “advisor” owed you an honest duty of care, perhaps a fiduciary duty, you should see how quickly they back away from their advertising promises.  Abused investment customers thus get abused twice here in Canada.  Once by misrepresentation by their salesperson/firm, and a second time when the courts beat them with legal tricks and word games.

Customers have very right to know what exactly they are dealing with. Whether or not they should trust this industry, or if they are in a “buyer beware” predatory sales relationship.  Unfortunately, almost anyone within the industry, is getting a salary from the industry, and thus cannot seem to remember where they left their ethical manners.  That includes each and every regulatory body in Canada.  100% are paid salaries from the industry

The industry thus gets to have it both ways.  They get to behave in a predatory sales manner.......for example mutual fund sales statistics from the industry say that four out of five investment sellers will recommend the highest cost, highest commission type of investment when faced with a choice between otherwise equal investment types.

The trick is, that because we are a self regulating industry, misrepresentation, misleading advertising, title inflation, and deception like this are all handled internally.  Or rather, not handled at all.  The Competition Bureau of Canada is well aware and will not touch the matter.  The police are also aware and have their hands full.

The net result is that your investment returns here in Canada, will average about 2% less over time because of the self serving nature of a self regulating industry.  This is born out by various global university studies.  That 2% will cut your future retirement saving value by half, over a 35 year period.

This trick is just another way that the financial services industry in Canada makes financial crime pay.  For themselves.  What should you do?

As one writer put it recently,  treat every investment seller you meet in Canada as you would treat a hardened criminal, and you will probably manage to protect yourself from some of the predatory sales games.

Larry Elford (former CFP, CIM, FCSI, Associate Portfolio Manager, retired) worked twenty years inside bank owned brokerage firms in the country and retired in 2004.  He writes, blogs and has completed a one man doc film project on what he learned as a broker at   He can be reached at:      More tricks of the investment trade found free of charge at

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