Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

Go Back   Calgarypuck Forums - The Unofficial Calgary Flames Fan Community > Main Forums > The Off Topic Forum
Ivrnet

Reply
 
Thread Tools
Old 03-18-2017, 11:22 AM   #121
Enoch Root
Franchise Player
 
Join Date: May 2012
Exp:
Default

Quote:
Originally Posted by Cecil Terwilliger View Post
Yes but you're missing the point that an unscrupulous advisor would much prefer to be in charge of his own oversight than have a dealer breathing down his neck.
No I don't think that's true at all. An unscrupulous advisor would want a) less oversight (which is why many of them migrate to the EMD space), or b) oversight from others, removing themselves from some of the responsibility. Firms that are responsible for their own compliance do not have less oversight - you have a clear mis-conception here.

The last thing an unscrupulous advisor would want is to be personally responsible for their compliance. And that is the most important item in all of this IMO.

Quote:
It's actually funny the argument you are making because you are just making assumptions that the dealer removes all responsibility from the advisor. In my experience it is the opposite. Their oversight keeps advisors aware of the regulatory requirements. And you are also assuming that being in charge of their own compliance will just make every advisor more knowledgable of the regulations and follow them. Again, my experience is the opposite.
Your experience is anacdotal.

First, I made no such assumption (that the dealer removes all responsibility from the advisor), what I said was that when the responsibility is left to the dealer, the advisor has less responsibility and that can lead to less understanding and less interest in the reasons for the regulations.

I am curious as to what your experience is with respect to advisors being in charge of their own compliance. Very few advisors are. Basically, we are talking about private investment counsels, and in my very extensive experience with them, the only way to even exist in that space is to have a very thorough and complete understanding of the regulations and why they exist. We're not talking about advisors making up their own rules and flying by the seat of their pants here, we're talking about having to take personal responsibility for the entire process, because the dealer isn't doing it for you and leaving you in a black box.

So please, I would love to hear about this personal experience.

Quote:
Either way a dishonest advisor is likely to find ways to skirt the rules. I just think it is easier when they don't have a dealer. My assumption is the dealer is doing their job, which may not always be the case.
To the first sentence, yes - regardless of the structure of regulation, dishonest people will seek ways to skirt the system. The question is: which system does the best job of deterring them? And more importantly, which system does the best job of holding them accountable?

When you say you think it's easier when they don't have a dealer, I am left thinking that you don't understand the other platforms.

And to your final sentence about the dealer doing their job... this actually sheds more light on my argument because part of the problem is that the dealer's goals are not necessarily aligned with the purpose of the regulations. A dealer wants to create an environment where their advisors are free to generate as much revenue as possible. What that generally leads to is a minimum level, lowest common denominator type of system.

Dealers are constantly lobbying for less regulation and softer rules, because when you are responsible for the compliance of others, you want those rules to be as soft, and as vague as possible.
Enoch Root is offline   Reply With Quote
Old 03-18-2017, 11:35 AM   #122
Enoch Root
Franchise Player
 
Join Date: May 2012
Exp:
Default

Quote:
Originally Posted by curves2000 View Post
Fascinating conversation for someone such as myself who still has a passion for the industry but felt and still feel a little concered about some of the things I saw. My biggest issue as to why I left was my passion and my personal career trajectory hope was to continue to evolve on the investment, planning and potentially portfolio management side one day.

I was being dragged by by big bank employer into the lending, credit card, bank account and insurance side which was not something I was interested in doing. I excelled in the client service aspect and still maintained my ethics to the highest degree right up until I left.

Enoch Root: I am kind of jumping into the conversation without reading the entire thread but are you referring to something that might be role specific? I am understanding what you are referring to but since I don't have the same experience as someone like you I just wanted to get a better understanding.
I am not sure exactly what you mean by this question, can you elaborate?

Quote:
What would be different from a client perspective as a IC at an independent firm vs an IC at a major bank's brokerage or private client division?
I am glad you asked this because there are very significant differences. First, it is important to note that every firm is different, and there are going to be good firms and not not so good firms in every camp.

However, as a general rule, the reason that the banks create IC platforms is not to make them fully independent, it's because a) that is the platform required for discretionary money management, and b) as an attempt to compete with independent ICs.

Bank ICs are still owned and largely controlled by the bank (dealer). That makes their independence essentially impossible (just like the original point I made to Slava: you can practice from the point of view of independence, but you can never actually be independent).

Quote:
Or are you referring more along the lines of the differences between an IC vs an investment adviser at a brokerage firm who probably just sells mutual funds with the odd ETF or stock thrown in?
So far in this conversation, I have been referring to brokerage firms, but the bnak ICs are important to discuss as well.

Quote:
It's my understanding that an IC must adhere to the IPS for the client where as with an investment adviser there is a lot more room for some of the disaster's I am sure we have all witnessed.
This is a fundamental issue. Independent firms are personally accountable for creating and adhering to their IPS. With a dealer, that accountability resides with the dealer. And the dealers' motivation is to make that accountability as soft and as vague as possible.

Quote:
If I am am not understanding competently I apologize but I am really intrigued by this thread and conversation as a whole.


Thx
You have asked some good questions and brought up some good points. Thanks.
Enoch Root is offline   Reply With Quote
Old 03-18-2017, 12:02 PM   #123
MoneyGuy
#1 Goaltender
 
MoneyGuy's Avatar
 
Join Date: May 2006
Exp:
Default

Quote:
Originally Posted by Enoch Root View Post
I think you missed my point.

The dealer doesn't add a layer of oversight. I'm not sure how you think you have 3 levels and we have 2. Investment Counsels have the exact same regulatory requirements and processes as a dealer firm like Manulife. (well, to be more precise, they are actually on different platforms and there are some differences, but they are too detailed for this conversation)

The point I was making is that, in the environment that you work under at Manulife - and at any dealer - advisors aren't as directly responsible for compliance and therefore manycan be less understanding of it and less concerned with it. The dealer takes care of it so out of site out of mind. Or it is looked upon as a burden that must be met.

At the ICPM level, that freedom doesn't exist. The practitioners are more directly responsible for their own compliance. That usually results in them being far more understanding of it, and engaged in it.

I am not suggesting that you don't take your compliance seriously. I am saying that it isn't the best platform for what the regulators are trying to achieve, and what we all want, which is a more evenly and appropriately regulated industry. And to have individual advisors more aware of, and more engaged in the regulatory requirements.
I don't think I've missed your point. We just disagree. I think having a dealer providing stringent oversight does add a layer of regulatory compliance.

Quote:
Originally Posted by Cecil Terwilliger View Post
Yes but you're missing the point that an unscrupulous advisor would much prefer to be in charge of his own oversight than have a dealer breathing down his neck.

It's actually funny the argument you are making because you are just making assumptions that the dealer removes all responsibility from the advisor. In my experience it is the opposite. Their oversight keeps advisors aware of the regulatory requirements. And you are also assuming that being in charge of their own compliance will just make every advisor more knowledgable of the regulations and follow them. Again, my experience is the opposite.

Either way a dishonest advisor is likely to find ways to skirt the rules. I just think it is easier when they don't have a dealer. My assumption is the dealer is doing their job, which may not always be the case.
I think this pretty much nails it. I take compliance seriously and not just because I know I have a dealer watching me and regulators watching both of us.
MoneyGuy is offline   Reply With Quote
Old 03-18-2017, 12:09 PM   #124
Enoch Root
Franchise Player
 
Join Date: May 2012
Exp:
Default

Since Manulife has been brought up, and a couple people in this conversation work there, I would like to bring up the precedent setting case of the Manulife advisor who sold a couple some garbage that he shouldn't have, and the couple successfully sued Manulife for it, because it illustrates some interesting points that have been brought up so far. (I am too lazy to find it, but I am guessing that you Manulife guys have it readily handy if anyone wants to post a link to the case)

This was an very important and influential case because it upped the responsibility of the dealer over their advisors.

The advisor in question has a Manulife sign over his door and thus the clients (rightly) believe that they are dealing with a Manulife representative. (Note: this is not about Manulife - the advisor could have been with any dealer and everything would have transpired identically)

The couple is discussing potential investments with their advisor. He shows them some standard investment options (which were all endorsed by Manulife), but when they don't bite, he then slides into some venture that he is personally flogging (unknown to, and definitely not endorsed by, Manulife).

Needless to say, the investment goes to #### and the poor old couple lose their savings. It is obvious to anyone that the investment was inappropriate for them, so they have a good case for a lawsuit.

They (well, their lawyer) serves the claim to Manulife as well as the advisor, on the basis that the advisor was a representative of Manulife and therefore the clients' assumption that Manulife endorsed the investment was a reasonable one.

Manulife argued that the investment was not something that they endorsed or even knew about, and was therefore not their responsibility, but simply the responsibility of the individual advisor.

The judge ruled against Manulife, and for the plaintiffs, essentially saying that it was totally reasonable for them to assume that if the advisor was licensed by Manulife (and all that that implies), that they could assume that this product was also endorsed/supported by Manulife, and therefore they are responsible.

This case is interesting for a lot of reasons:
  1. independence can mean a lot of different things
  2. who is/should be at fault here?
  3. should the dealer be responsible for the actions of a rogue advisor?
  4. if the dealer is responsible for the advisor, where does that responsibility end?
  5. if the dealer is responsible for the advisor, how does the dealer protect itself against rogue advisors?

One might argue that this case shows why the dealer needs to have more control over what individual advisors are up to. But I would argue that is naive.

First, going back to the independence issue, the more control the dealer has over their advisors, the less independent those advisors are.

Second, there is no way that dealers can possibly keep track of individual advisors and the things they are doing outside the scope of the dealer's influence and control.

Therefore, the only defenses dealers have are to reduce advisors' independence, or - and far more importantly - to continue to soften and cloud the rules and regulations, in order to protect themselves.

(Note: at an independent firm, the advisor and the firm are one and the same, and are therefore would be directly responsible and accountable)
Enoch Root is offline   Reply With Quote
Old 03-18-2017, 12:11 PM   #125
Enoch Root
Franchise Player
 
Join Date: May 2012
Exp:
Default

Quote:
Originally Posted by MoneyGuy View Post
I don't think I've missed your point. We just disagree. I think having a dealer providing stringent oversight does add a layer of regulatory compliance.
Except you are wrong - it does not add another level of compliance

What it does is separate the responsibility from the individuals to another firm. And the end result of that is (almost always) softer rules and less accountability.


Quote:
I think this pretty much nails it. I take compliance seriously and not just because I know I have a dealer watching me and regulators watching both of us.
This discussion is not about whether any of us take compliance seriously. THe fact that we are discussing it here demonstrates that we all take it seriously.

The only issue under debate is what platform would best serve the interests of investors.
Enoch Root is offline   Reply With Quote
Old 03-18-2017, 12:21 PM   #126
MoneyGuy
#1 Goaltender
 
MoneyGuy's Avatar
 
Join Date: May 2006
Exp:
Default

An advisor so inclined will find a way to rip off clients regardless of whatever supervision exists. As for your example, I'll cite a contrary one. You'll remember the Portus fiasco. Manulife didn't have to but stepped up to cover client losses. (I should refrain from further comments on specific firms so will leave it at that.)
MoneyGuy is offline   Reply With Quote
Old 03-18-2017, 12:22 PM   #127
Locke
ness Monster
 
Locke's Avatar
 
Join Date: Mar 2007
Location: Income Tax Central
Exp:
Default

Quote:
Originally Posted by MoneyGuy View Post
An advisor so inclined will find a way to rip off clients regardless of whatever supervision exists. As for your example, I'll cite a contrary one. You'll remember the Portus fiasco. Manulife didn't have to but stepped up to cover client losses. (I should refrain from further comments on specific firms so will leave it at that.)
That goes pretty much for anyone.
__________________
- "Somebody may beat me, but they're going to have to bleed to do it."
- Steve Prefontaine
Locke is offline   Reply With Quote
Old 03-18-2017, 12:33 PM   #128
Enoch Root
Franchise Player
 
Join Date: May 2012
Exp:
Default

Quote:
Originally Posted by MoneyGuy View Post
An advisor so inclined will find a way to rip off clients regardless of whatever supervision exists. As for your example, I'll cite a contrary one. You'll remember the Portus fiasco. Manulife didn't have to but stepped up to cover client losses. (I should refrain from further comments on specific firms so will leave it at that.)
As I said in the post, that reference had nothing to do with Manulife - they did nothing wrong, and I did not imply that they did.

Your defensive stance is puzzling.

As for Portus - all kinds of interesting issues there. Any you want to discuss, or are you just trying to (needlessly) deflect attention from Manulife?
Enoch Root is offline   Reply With Quote
Old 03-18-2017, 12:33 PM   #129
MoneyGuy
#1 Goaltender
 
MoneyGuy's Avatar
 
Join Date: May 2006
Exp:
Default

Quote:
Originally Posted by Locke View Post
That goes pretty much for anyone.
True, but the potential damage is very high in the business we're discussing.
MoneyGuy is offline   Reply With Quote
Old 03-18-2017, 12:37 PM   #130
Enoch Root
Franchise Player
 
Join Date: May 2012
Exp:
Default

Quote:
Originally Posted by MoneyGuy View Post
True, but the potential damage is very high in the business we're discussing.
Yes. And the pertinent question continues to be: what is the best method of regulating advisors, and holding them accountable?
Enoch Root is offline   Reply With Quote
Old 03-18-2017, 03:12 PM   #131
curves2000
Crash and Bang Winger
 
Join Date: Dec 2013
Location: Calgary, Canada
Exp:
Default

Thanks to everyone for the great convo with regards to the thread topic, fascinating.

I guess the way I look at things is that the industry and the regulators could do a much better job of protecting clients and making things more transparent. This business sure doesn't do itself any favors with some of the things that occur to clients and what consumers hear about in the media as well.

I mentioned this in another thread but I was wondering if any of you had any advice to someone such as myself who may be looking to get back into the business?

I have a passion for the industry and helping clients to the best of my abilities but working at one of the big 5 banks damaged it a bit. I was dealing with exactly the type of garbage described in the original thread and being compared employee's who were pushing the boundaries big time. Long story short, I quit in late 2014 and been working within the family business since then but looking at giving the business another try.

Thanks!
curves2000 is offline   Reply With Quote
Old 03-18-2017, 06:52 PM   #132
heep223
Could Care Less
 
heep223's Avatar
 
Join Date: Sep 2013
Exp:
Default TD bank employees admit to breaking the law for fear of being fired

A related issue to the OP and the conversation above is that our regulator doesn't require those giving financial and investment advice to put their client's interests ahead of their own. Unless they are a full portfolio manager. 95% of those registered in the investment management business are sales people.

Should I repeat that. Those giving advice on how to invest your life savings don't have a legal obligation to put your interests ahead of their own.

It's a huge failure of our system and though it is getting more traction lately, it doesn't get near enough attention because people don't fully understand.

It just boggles my mind that we have allowed this to happen.
heep223 is offline   Reply With Quote
The Following 3 Users Say Thank You to heep223 For This Useful Post:
Old 03-18-2017, 07:05 PM   #133
Enoch Root
Franchise Player
 
Join Date: May 2012
Exp:
Default

Quote:
Originally Posted by heep223 View Post
A related issue to the OP and the conversation above is that our regulator doesn't require those giving financial and investment advice to put their client's interests ahead of their own. Unless they are a full portfolio manager. 95% of those registered in the investment management business are sales people.

Should I repeat that. Those giving advice on how to invest your life savings don't have a legal obligation to put your interests ahead of their own.

It's a huge failure of our system and though it is getting more traction lately, it doesn't get near enough attention because people don't fully understand.

It just boggles my mind that we have allowed this to happen.
Exactly. I wish we had a licensing platform of 'Fiduciary' in Canada, like they do in the US.

My firm acts 100% as a fiduciary, but it is difficult to get investors to even understand what that means.
Enoch Root is offline   Reply With Quote
The Following 2 Users Say Thank You to Enoch Root For This Useful Post:
Old 03-18-2017, 07:09 PM   #134
heep223
Could Care Less
 
heep223's Avatar
 
Join Date: Sep 2013
Exp:
Default

Quote:
Originally Posted by Enoch Root View Post
Exactly. I wish we had a licensing platform of 'Fiduciary' in Canada, like they do in the US.



My firm acts as 100% as a fiduciary, but it is difficult to get investors to even understand what that means.

Yeah the issue with education runs deep. I don't blame the up and coming generations for their distrust in the investment industry. It is completed warranted. Sounds like similarly to you I'm a registered portfolio manager, but people don't know the difference between a PM and their bank's financial advisor. The govt and regulators have failed us in this. It really pisses me off.
heep223 is offline   Reply With Quote
Old 03-19-2017, 05:10 PM   #135
Slava
Franchise Player
 
Join Date: Dec 2006
Location: Calgary, Alberta
Exp:
Default

Quote:
Originally Posted by heep223 View Post
A related issue to the OP and the conversation above is that our regulator doesn't require those giving financial and investment advice to put their client's interests ahead of their own. Unless they are a full portfolio manager. 95% of those registered in the investment management business are sales people.

Should I repeat that. Those giving advice on how to invest your life savings don't have a legal obligation to put your interests ahead of their own.

It's a huge failure of our system and though it is getting more traction lately, it doesn't get near enough attention because people don't fully understand.

It just boggles my mind that we have allowed this to happen.
This just goes to what I brought up earlier about the industry getting in their own way I think. We have proposals on the table for a "best interests" standard and yet "the industry" campaigns against it. Most people would assume that this would make complete sense, but we can't even get agreement on what should be incredibly basic and obvious.

And there's a bit of issue in general with the industry and how its perceived. You have good advisors, providing a necessary service and good advice to people. Yet the profession has been constantly derided and watered down in the media, to the point where people believe they can do it all on their own or the advice is useless. Then we wonder as a society why people are so unprepared to plan for their financial future, and are so ignorant about tax and estate issues that affect them so greatly.
Slava is offline   Reply With Quote
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -6. The time now is 06:40 PM.

Calgary Flames
2016-17




Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
Copyright Calgarypuck 2016