In recent years, a growing number of Canadian reports and articles have highlighted concerns about the sales practices of employees at Canadian banks. More recently a series of undercover investigations has brought this issue to the forefront CBC Marketplace: Hidden cameras capture bank employees misleading customers, pushing products that help sales targets. The main message of this investigation is that bank employees or financial advisors (spelled with an ‘o’) may not have a fiduciary duty to their customers, unlike registered financial planners.
A fiduciary duty is a legal obligation to act in the best interests of another party. Registered financial planners, such as those who hold the Certified Financial Planner (CFP) designation, are required to adhere to a fiduciary standard when providing advice to their clients. This means they must put their clients' interests first and make recommendations that are in the best interest of the client. Our office put together an article in November 2023 to better explain the various designations within our industry: Navigating the Landscape of Professional Designations
However, despite the regulations around designations, bank employees, such as financial advisors, may not have the same fiduciary responsibility to their customers. This means that they could be incentivized to sell certain products or services to their customers, even if those products or services are not in the best interest of the customer. Unfortunately, despite these various reports, in recent years major banks have only moved further away from offering independent advice. In 2018 the Financial Consumer Agency of Canada (FCAC) conducted an investigation following a series of concerning reports, and found that a focus on sales targets was increasing the risk of banks putting sales ahead of the interests of customers. The FCAC report issued in 2018 made several recommendations for improvement. Years later the questions facing bank employees around incentivized sales practices and the potential lack of fiduciary duty remains a topic of concern. Despite years of reporting, as noted in the CBC Marketplace investigation it seems that as of 2024 the major banks continue to show a lack of improvement.
More than ever, it is important for consumers to be aware of the potential differences in the responsibilities of bank employees and registered financial planners. When seeking financial advice, a key question to ask is about the professional's fiduciary duty, and to be cautious of any recommendations that may not align with your financial goals and needs. Consumers can easily type in an advisor’s name into the regulator’s search tool to confirm they have at least the minimum requirements: https://www.fpcanada.ca/findaplanner
Together, Cliff, Mario, and Mark form a dynamic team with a holistic understanding of various facets of the investment industry. Their diverse designations not only enhance their individual capabilities but also contribute to a well-rounded and versatile approach to investment management. This trio's combined expertise positions them as valuable assets in a field that demands a nuanced understanding of financial markets, strategies, and risk management.