Know Your Advisor (#KYA)

Know Your Advisor (#KYA)
Posted on October 12, 2018 | Larry Elford | Written on October 12, 2018
Letter type:

Author's Note:

Author's Note:

The number one item for investors to know is whether they are in a "Buyer Beware" salesperson relationship or a "Professional Fiduciary" relationship of trust.  CBC News revealed in 2017 (video below) that 96% of self titled "Advisors" in Canada hold a salesperson license and not the license that they represent to the public.  

“To give biased advice with the aura of advice in the customer’s best interest – is fraud."

"This standard should apply regardless of whether the advice givers call themselves advisors, advisers, brokers, consultants, managers or planners.” James J. Angel, Ph.D., CFA and Douglas McCabe Ph.D., Ethical Standards for Stockbrokers: Fiduciary or Suitability? (Sept. 30, 2010).

Below is the simple disclosure that we believe investors should be made aware of.  

#KYA  (Know Your Advisor)

Author's Video Note:

Of utmost importance to investor fairness is to Know Your “Advisor” (KYA). This means to understand the true obligations and duties of care that advisors owe, or do not owe, to any investor.

The TWO MOST COMMON investment registrants in Canada: 

“Dealing Representative” is the largest category with over 116,000 sales agents in Canada. Until 2009 this category was officially termed “Salesperson”, and as recent as 2017 was still quite clearly described by regulators as a “Salesperson” role.   

Most Dealing Reps work for banks, investment firms, insurance and mutual fund dealers.   They are the product sales representatives for dealers and not to be confused with professional fiduciary “advisers”.  Dealing reps are governed by self-determined “suitability” standards regarding what they sell, and today that is the lowest standard found in the industry. Millions of Canadians are being sold investments by persons mis-representing and concealing this registration and it's sales roles. It is crucial for Canadians to be informed whether they are in a salesperson-relationship, or a professional advisory relationship.

The second category, at around 4000 registrants, is an “Advising Representative”.  Advisers carry the legal duty of a fiduciary and thus could be compared to having a professional “do no harm” requirement similar to a doctor.  Fiduciary advisers are well explained at the following site:

Caution #1 for investors, is that almost all licensed “Dealing Representatives” use a marketing-ploy of title inflation, to lead investors into the mistakenly belief that they are “Advising representatives”.  Commission sellers thus mis-direct investors by calling themselves by the clever but legally meaningless title “Advisor”.  Millions of Canadians are thus mis-informed of whether they are dealing with someone who must advise on behalf of the client…or are selling products on behalf of a dealer.   

Caution #2   Selling products is not giving advice. Giving advice is not selling products.  Investment sellers (and regulators) have massive incentives to keep the public in the dark about these opposite roles. 

Caution #3  Regulators add to the public confusion by altering rules, titles, descriptions, and terms.  Investor advocates are concerned with conflicts of interest caused when financial firms pay the regulators…who police those financial firms…who pay the regulators.  When regulator salaries become as high as $700,000, this increases the risk of financial influence on regulators.

Investor advocates believes these cautions are important because  when a commission sales “Dealing Representative” conceals their sales license and role from public view, investors are not protected by the fiduciary duty, or by assumed professional standards. Dealing Reps can lawfully sell anything that meets a self-determined “suitability standard”, rather than the higher fiduciary duty of the licensed Advising Representative.

Misinformed investors are too-often sold the most expensive and thus worst performing investments, since these are the most profitable for the seller/dealer. Even the worst financial product can still be called “suitable”…from a salesperson perspective.

Caution #4 is the inability for investors to find, and clearly understand the license and duty of their “advisor”.  This speaks a second time to the conflicts of interest, when the financial industry pays virtually every key investment regulator. Canadians should take the word “advisor” with a large grain of salt, and it is now evident that even the word “regulator”, may no longer mean what the public understands it to mean.

Search for any investment registrant at and you may be able to determine how your “advisor” is registered…but not it’s meaning for the investor. Provincial regulators are quietly doing a disquieting job of making this information difficult, if not impossible for the public to understand.

EVERY Canadian Securities regulator’ appears 'fully invested’ in helping the public to falsely ‘assume’ that their financial advice-giver IS registered….while helping to concealing precisely HOW they are registered…and what that registration means to an investor. Why would regulators hide the most important item of relationship disclosure that affects Canadians life savings? (follow the money)


About The Author

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Investment Misconduct and Malpractice Analyst

Larry Elford is acclaimed as a qualified expert on the subject of White Collar Crime as it relates to the investment selling industry. He... More