'I feel duped': Why bank employees with impressive but misleading titles could cost you big time
Most financial professionals in Canada are licensed as salespeople with no fiduciary duty to clients
By Erica Johnson, CBC News Posted: Mar 29, 2017 5:00 AM ET190 Comments
Gary McCaig
The "e" vs "o" nonsense is
certainly a classic case of banks acting in total, immoral self
interest. It is becoming increasingly evident that banks do not deserve
the special rights and protections they get in Canada. The industry
needs to be opened to more competition.
@Gary McCaig By the same
token the advice of CBC's journalists and that of their friends Stan
Buell and Larry Elford should be taken with a grain of salt as well.
Buyer beware and do your own research.
Terrza LaBonte
@Gary McCaig I dedicated a 25
year executive career competing against the BIG BANKS in Canada. The
collusion, price fixing, manipulation of regulations and monopolization
of all secondary and tertiary services by this oligopoly costs Canadians
accountable BILLIONS every year.
The reason Canadian banks didn't collapse in 2008 has more to do with the obscene profits they accumulated as an oligopoly providing a strong balance sheet than it does that they were prudent and well run.
Trust me it has cost Canadians just as much as Americans. Difference is Americans were shocked into it in 2008 while we were slow bled-dry for a century.
The reason Canadian banks didn't collapse in 2008 has more to do with the obscene profits they accumulated as an oligopoly providing a strong balance sheet than it does that they were prudent and well run.
Trust me it has cost Canadians just as much as Americans. Difference is Americans were shocked into it in 2008 while we were slow bled-dry for a century.
David Raymond Amos
@Terrza LaBonte Since 1974 or
so the Banksters have had everything their way no thanks to Trudeau
"The Elder" and his cohorts. I have no doubt Canada's greatest Prime
Minister the Right Honourable R.B. Bennett started rolling in his grave
back then and hasn't quit since.. Hell even former Deputy Prime Minister
Paul Hellyer fessed up and wrote a book about it in 2001 called
"Goodbye Canada"
'I feel duped': Why bank employees with impressive but misleading titles could cost you big time
Most financial professionals in Canada are licensed as salespeople with no fiduciary duty to clients
By Erica Johnson, CBC News Posted: Mar 29, 2017 5:00 AM ET
Mike Black invested nearly $1 million with the help of an
RBC 'vice-president' who he later learned is only licensed as a
salesperson — his investment barely kept up with inflation.
(Joe Da Ponte/CBC )
Mike Black says he feels "completely betrayed" after
trusting RBC Dominion Securities employees with impressive-sounding
titles to manage his life savings, only to earn far below the market
average for six years.
"I worked 35 years at two jobs and saved up a considerable amount due to the fact that I didn't have a pension and would need money for retirement," said Black, who managed to put away nearly $1 million.
An RBC "financial advisor" — "advisor" with an "o" rather than an "e" is important, but more on that later — invested his money in mutual funds, but when the portfolio performed poorly for three years and Black threatened to leave the bank, he was sent to an RBC "vice-president" who would manage his money.
Black received a financial plan that claimed his nest egg would earn "about six per cent in annual interest" when invested in different mutual funds, mostly owned by RBC.
His investments actually earned less than three per cent and cost Black more than $30,000 in fees over six years.
"How is it that you end up getting a return of this kind over this period of time, when this is to be managed by a professional and we pay such high fees?"
Turns out, the RBC vice-president was actually licensed as something called a "dealing representative" — a salesperson.
"I feel duped," Black said. "My portfolio is my pension. All they are doing is selling what the bank wants them to sell."
In an email to Go Public, RBC said its "internal review found that the portfolio was appropriate based on the risks and objectives the client communicated to us."
A recent report by the Small Investor Protection Association found there are 121,000 people registered as financial professionals in Canada, and the vast majority are registered as dealing representatives — salespeople licensed to sell financial investments.
Only about 4,000 of these registered financial professionals have a fiduciary duty, which is a legal obligation to act in the client's best interest.
"The game today is to earn clients' trust," said Larry
Elford, a former certified investment manager with RBC and lead
researcher of the SIPA report. "And never let them know that you are
actually a commissioned salesperson and you don't have to honour that
trust."
The stakes are high, says Elford, who points out that a two per cent management fee on mutual funds typically cuts an investor's retirement fund by about half over a 35-year period.
A common trick for misleading customers, according to Elford, is the banking industry's use of the term "financial advisor" — spelled with an "o."
He says "advisor" is an unregulated title that anyone can use, whereas the title "adviser" — spelled with an "e" — can only be used if the employee has a fiduciary responsibility to the client.
"Advisors can sell you the third, fourth, fifth or least beneficial product to you," Elford said. "They do that a great deal of the time if it makes them more commissions, or if their bank manager is telling them they need to sell more of the house-brand product."
The Ontario Securities Commission confirms that "adviser" is a legal term under securities law that describes a person or company that is registered to give advice about securities, whereas "advisor" is not.
In an email to Go Public, the Canadian Securities Administrators confirmed that it does not regulate most titles used by employees in the financial industry.
Many bank employees who've contacted Go Public say they act more like salespeople than anything else because of pressures from "high up" to hit revenue targets. CBC is concealing their identities to protect their jobs.
"I would say 90 per cent of my day is trying to hit targets," said a financial services representative at TD Bank.
"I have to go [meet with] my manager daily and go through each customer that's scheduled for me and see how many 'units' I can get from that customer."
She says if a client has money in a savings account, she's encouraged to get them to buy TD mutual funds instead of giving financial advice she thinks would be better, such as paying down a credit card or high-interest loan.
"It's completely about selling," she said.
A TD financial advisor who quit last month says he was "thrown into the role" and expected to learn on the job.
"I had zero training and had to learn everything on the go," he said.
A CIBC financial advisor says he spends his day selling investments that may not be in his customers' interests, even though they think they're getting impartial advice.
"The term financial advisors is bank jargon for salesperson," he said. "At least in other industries they are more open about it. You sell cars? Well, you are a car salesperson. We are not advising people on anything.
We are just trying to make sales."
"How do you expect a 20-year-old employee who's getting paid $12 an hour to provide advice with the title 'client advisor,' when they're really just equipped to sell? It's not fair to anybody … you're putting clients at risk."
In a statement, RBC says it "stands behind the advice and support" its "investment advisors provide to clients."
Bank employees at all levels at BMO and Scotiabank told Go Public they, too, feel their titles are misleading because they're mostly under pressure to sell bank-owned mutual funds and other products to boost the bottom line.
In previous statements to Go Public, TD, CIBC and Scotiabank said their clients are their top priority and they expect their employees to behave ethically.
"I've talked to hundreds and hundreds of people who've been victimized," Buell said. "And every one trusted their advisor."
He said he doubts any of the advisors were actually advisers — with an "e" and a fiduciary duty. "They're all salespeople, trained in sales."
He says banks and other financial institutions need tougher regulations.
"Self-regulating doesn't work very well," he said. "It must be an outside agency that is not composed of the industry to have the power to handle complaints, to investigate and authorize and even pay restitution for the victims of the financial institutions."
As a start, Buell would like Canada's big banks to be more transparent and call their employees salespeople, not "advisors" or other titles that suggest they're working in the customer's interest when they're actually serving their employer.
But his experience has left him shaken.
"I've always been very trusting, conscientious, both me and my wife. We've walked the walk. And quite frankly, I feel like it's been a hit and run."
"I worked 35 years at two jobs and saved up a considerable amount due to the fact that I didn't have a pension and would need money for retirement," said Black, who managed to put away nearly $1 million.
An RBC "financial advisor" — "advisor" with an "o" rather than an "e" is important, but more on that later — invested his money in mutual funds, but when the portfolio performed poorly for three years and Black threatened to leave the bank, he was sent to an RBC "vice-president" who would manage his money.
Black received a financial plan that claimed his nest egg would earn "about six per cent in annual interest" when invested in different mutual funds, mostly owned by RBC.
- Been Wronged? Contact GoPublic@cbc.ca
His investments actually earned less than three per cent and cost Black more than $30,000 in fees over six years.
"How is it that you end up getting a return of this kind over this period of time, when this is to be managed by a professional and we pay such high fees?"
'All they are doing is selling what the bank wants them to sell.' - Mike Black, RBC investor
Turns out, the RBC vice-president was actually licensed as something called a "dealing representative" — a salesperson.
"I feel duped," Black said. "My portfolio is my pension. All they are doing is selling what the bank wants them to sell."
In an email to Go Public, RBC said its "internal review found that the portfolio was appropriate based on the risks and objectives the client communicated to us."
Deceptive employee titles
A recent report by the Small Investor Protection Association found there are 121,000 people registered as financial professionals in Canada, and the vast majority are registered as dealing representatives — salespeople licensed to sell financial investments.
Only about 4,000 of these registered financial professionals have a fiduciary duty, which is a legal obligation to act in the client's best interest.
Larry Elford says thousands of bank employees across Canada are salespeople with fancy titles. (Dave Rae/CBC )
The stakes are high, says Elford, who points out that a two per cent management fee on mutual funds typically cuts an investor's retirement fund by about half over a 35-year period.
What's in a vowel?
A common trick for misleading customers, according to Elford, is the banking industry's use of the term "financial advisor" — spelled with an "o."
He says "advisor" is an unregulated title that anyone can use, whereas the title "adviser" — spelled with an "e" — can only be used if the employee has a fiduciary responsibility to the client.
"Advisors can sell you the third, fourth, fifth or least beneficial product to you," Elford said. "They do that a great deal of the time if it makes them more commissions, or if their bank manager is telling them they need to sell more of the house-brand product."
The Ontario Securities Commission confirms that "adviser" is a legal term under securities law that describes a person or company that is registered to give advice about securities, whereas "advisor" is not.
In an email to Go Public, the Canadian Securities Administrators confirmed that it does not regulate most titles used by employees in the financial industry.
'It's completely about selling'
Many bank employees who've contacted Go Public say they act more like salespeople than anything else because of pressures from "high up" to hit revenue targets. CBC is concealing their identities to protect their jobs.
"I would say 90 per cent of my day is trying to hit targets," said a financial services representative at TD Bank.
"I have to go [meet with] my manager daily and go through each customer that's scheduled for me and see how many 'units' I can get from that customer."
'I had zero training and had to learn on the go.' - TD financial advisor who recently quit
She says if a client has money in a savings account, she's encouraged to get them to buy TD mutual funds instead of giving financial advice she thinks would be better, such as paying down a credit card or high-interest loan.
"It's completely about selling," she said.
A TD financial advisor who quit last month says he was "thrown into the role" and expected to learn on the job.
A TD financial services representative who
contacted Go Public said 90 per cent of her day is spent trying to hit
sales targets. (Chris Wattie/Reuters)
A CIBC financial advisor says he spends his day selling investments that may not be in his customers' interests, even though they think they're getting impartial advice.
"The term financial advisors is bank jargon for salesperson," he said. "At least in other industries they are more open about it. You sell cars? Well, you are a car salesperson. We are not advising people on anything.
We are just trying to make sales."
- Employees at Canada's 5 big banks speak out about pressure to dupe customers
- TD teller says customers pay price for 'unrealistic' sales targets
"How do you expect a 20-year-old employee who's getting paid $12 an hour to provide advice with the title 'client advisor,' when they're really just equipped to sell? It's not fair to anybody … you're putting clients at risk."
In a statement, RBC says it "stands behind the advice and support" its "investment advisors provide to clients."
Bank employees at all levels at BMO and Scotiabank told Go Public they, too, feel their titles are misleading because they're mostly under pressure to sell bank-owned mutual funds and other products to boost the bottom line.
In previous statements to Go Public, TD, CIBC and Scotiabank said their clients are their top priority and they expect their employees to behave ethically.
'Self-regulating doesn't work very well'
Stan Buell, founder of the Small Investor Protection Association, says he's heard too many stories from people who thought a financial advisor was going to look out for their best interests.
Stan Buell, founder of the Small Investor
Protection Association, says bank employees should be called salespeople
if that's their role.
He said he doubts any of the advisors were actually advisers — with an "e" and a fiduciary duty. "They're all salespeople, trained in sales."
He says banks and other financial institutions need tougher regulations.
"Self-regulating doesn't work very well," he said. "It must be an outside agency that is not composed of the industry to have the power to handle complaints, to investigate and authorize and even pay restitution for the victims of the financial institutions."
As a start, Buell would like Canada's big banks to be more transparent and call their employees salespeople, not "advisors" or other titles that suggest they're working in the customer's interest when they're actually serving their employer.
- Call centre employees for big banks reveal upsell pressures
- ANALYSIS| Banks are businesses, and you are a profit centre
But his experience has left him shaken.
"I've always been very trusting, conscientious, both me and my wife. We've walked the walk. And quite frankly, I feel like it's been a hit and run."
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