Can You Trust Your Advisor

In 2009 the CBC produced an excellent program entitled "Can You Trust Your Advisor". They aired it several times which was a great help to raise investor awareness. Several websites provided links to this program but recently it has disapeared from the CBC website and all of the links on other websites are no longer functioning.

Jonathan Chevreau had a follow up article using the title as a headline. His article is still available on the Wealthy Boomer website. I had sent an e-mail to Jonathan and he posted it on his website. The comment was:

Posted by Jonathan Chevreau
May 12 2009

10:22 AM From Stan Buell: While I generally agree with what you say I do not agree with your current article.


Something is needed to provide balance to the industry. Regulators attempt to create the perception that Canadians can trust the industry and that it is well regulated.


I have just received an offer that goes to financial advisors on how to provide leverage up to 3 to 1. One of my brokers told me about 4 to 1, and there was a case not too long ago of a senior leveraged at 10 to 1.


Mutual fund companies regularly offer "leverage plans" to all investors. While the industry may say that investors make their own decisions, the reality is that most investors trust the industry.


How many victims have lost their savings and then found the firms they trusted will claim they have no responsibility and that the investors is responsible for approving the advisor's advice?


You have no doubt heard the IDA explain how a forgery is not always a forgery, to their explanation to victims who claim documents were forged that they are not handwriting experts and so close the file.


If the industry was 95% good as you suggest then they would stand behind their fiduciary responsibilities and would not be so eager to leverage seniors and other small investors ill equipped to assess the risk of leverage or evaluate the investment products offered.


You are talking about an industry that continues to develop products to circumvent the rules or that seeks exemptions to existing rules to sell toxic products to the public.


I agree there are many "white hats" in the industry, but even many of these are limited as to what they can do for their clients. You no doubt have talked to many of them as I have.


The fundamental problem is there are no industry protections for the victims of the "black hats". They must seek justice on their own.


Why has the Expert Panel on Securities Regulation finally recommended that regulators have the power to order restitution and the establishment of an Investor Protection Fund to pay compensation?


That is something we and others have been saying for years. I believe we mentioned it on Linda Leatherdale's show a decade ago when she was still in the business.


The industry/regulators try to create an illusion that is much different from reality. If they want investors to be responsible for all investment decisions and pay only for the trades then why not come out and say it? Why mislead investors with advertising that suggests retirement security can be provided by dealing with advisors?


Why the regulatory differentiation between ADVISERS and ADVISORS?


Why mislead the public with titles like "Financial Consultant", "Investment Advisor" etc. IF they are only SALESPEOPLE?


I suggest that the CBC and the rest of us concerned about the welfare of Canadians and their retirement security can become much more balanced when we see some honesty and integrity in the industry and the regulators. With some exceptions that is sadly lacking.


At least that is my opinion.

I believe these comments are timeless as very little changes.

Read more: http://network.nationalpost.com/NP/blogs/wealthyboomer/archive/2009/05/11/can-you-trust-your-financial-advisor.aspx#ixzz0ipEtE1dv