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Greg Fertuck will spend life behind bars with no chance of parole until he is 90 years old, a judge ruled on Thursday at Saskatoon's Court of King's Bench.
Every major bank and credit union in Canada employs financial advisors who help customers manage their money, investments, and assets.
Advisors can be an excellent resource for busy consumers and those who would rather avoid the complexities of financial management. However, recent allegations against employees of major Canadian banks raise questions about the integrity of financial advice.
Some suggest that high-pressure sales tactics are not uncommon, leading consumers to wonder if financial advisors are merely glorified salespeople. I鈥檝e worked as a financial advisor in Canada, and I鈥檒l address some of these concerns and highlight the distinction between unethical practices and the genuine value that good advisors can offer.
First, let鈥檚 discuss how financial advisors are paid.
While some advisors are salaried or paid hourly, many also charge asset management fees or earn commissions by selling certain financial products and services. They can also have aggressive sales targets to hit in order to reach a certain bonus or to not get fired.
Since many advisors earn commissions and charge fees based on the number of assets they manage, it could create an incentive to upsell and often oversell certain products and services. This is where your advisor鈥檚 integrity comes into play.
Here, a greedy advisor may attempt to use high-pressure sales tactics to push products to you that you may not necessarily need, similar to some of the dishonest tactics used by less-than-reputable car dealerships.
Some of these include:
have highlighted the prevalence of high-pressure sales tactics among employees of Canada's major banks. Independent investigations reveal that employees often face significant pressure from their superiors to meet sales targets, which can unfortunately lead to unethical practices.
I鈥檝e worked at a big bank as a financial advisor in the past, and most financial advisors I met are honest people. Not all financial advisors are untrustworthy. While there are some bad actors, the unfortunate reality is that unethical management practices and unrealistic expectations imposed by management on their staff can put honest financial advisors in difficult situations.
Many consumers are starting to work with financial advisors who charge a fee-for-service. Instead of getting a commission for selling a specific type of product, the advisor charges a fee for financial planning or other services provided.
This isn鈥檛 to say that all bank-employed advisors are bad. But if you鈥檝e had a bad experience, it may be wise to seek out a fee-only arrangement instead.
This is one way to ensure that the financial advisor will have less of a conflict of interest when recommending a certain investment product or service.
The Investment Funds Institute of Canada (IFIC) has a long list of great success stories showing the . Some green lights to look for when vetting a financial advisor or wealth management firm include:
In contrast, here are some red flags to keep an eye out for:
Becoming a financial advisor in Canada is not easy. To become an advisor, you must complete training to become .
That being said, a good advisor can really help those with financial needs. They understand the complexities of the finance space and help you make the best decisions with your money, allowing you to take a more hands-off approach to managing your wealth.
Working with a good financial advisor can give you considerable peace of mind, mitigate some of the risks associated with investing in money markets, and allow you to make more confident decisions with your money.
Whether you鈥檙e choosing a new doctor, mechanic, accountant, or financial advisor, there will be people who are great at their profession, as well as bad apples who are looking for a quick buck. It鈥檚 up to you to sift through the ones that are out there and choose the one best suited for your needs.
Working with a financial advisor isn鈥檛 always a necessity. For those who are more financially savvy, DIY investing in ETFs through a TFSA or RRSP can be a great way to invest for your future.
However, if you鈥檙e working with larger sums of money or plan to diversify your assets, purchase property, start a business, make major investments, or merely want a professional to help guide your financial future, a trustworthy financial advisor can help you plan and invest with clarity and confidence.
Not sure where to put your money? Keep on reading to learn about more wealth management tips for high-income earners.
Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on .
Do you have a question, tip or story idea about personal finance? Please email us at dotcom@bellmedia.ca.
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