Advocis Responds in Defense of Advisors-Upholds Advisor Professionalism in Portus Case

Date: Friday, April 29, 2005
Author: Advocis

Advocis, The Financial Advisors Association of Canada, today responded to recent comments by various parties on the role of advisors in the Portus case.

“We take strong objection to the implication that advisors who referred their clients to Portus funds were only motivated by lucrative referral fees and the further notion that all advisors act outside of a client’s best interests,” noted Steve Howard, president and CEO of Advocis.  “Financial advisors were as taken by surprise as were many large manufacturers and distributors in this situation.”

Advisors need to be able to rely on the soundness of the information that is provided to them by product manufacturers.  This goes to the core of prudential responsibility.

In commenting on the industry, Mr. Howard observes that, “The fundamental problem is the patchwork of advisor regulation and oversight.  Solution seeking in the Portus case leads to more well intentioned, but misguided, focus on over-regulation which does not solve the consumers’ problem.  It does not provide clarity in determining who is qualified to deliver advice nor does it provide clarity between the role of advice and product regulation sorely lacking today.”

“And when it comes to advisors who represent consumer interests, the first question that needs to be asked is whether or not the advisor who sits in front of a client is appropriately trained, licensed and designated to impart the provision of advice,” Mr. Howard went on to say. 

Professionally-minded financial advisors  are committed to understanding their client’s needs. These advisors conduct their due diligence, subscribe to an established Code of Conduct and obtain appropriate licences and designations, all with a view to serving the best interests of their clients.  Membership in Advocis requires that all financial advisors adhere to a Code of Professional Conduct which governs their behaviour.

Mr. Howard went on to say,  “The industry also needs to look at what approval processes are in place to allow consumers to purchase high risk products like hedge funds. We believe that it is unbecoming of participants who had a material role in approving Portus funds for sale to the public to now look to blame advisors for the deficiencies of Portus’ management of those funds.”

The financial services industry operates in a highly regulated environment and as such, there is a three-part responsibility toward consumers.  Regulators, product manufacturers and advisors are all involved in presenting investment products to consumers and it follows that the question of responsibility in this equation needs to be appropriately examined.

About Advocis
Advocis, The Financial Advisor Association of Canada, is the largest voluntary professional membership association of financial advisors. With more than 15,000 advisors in 50 chapters across Canada, Advocis members provide financial and product advice to over 12 million Canadians across a variety of distinct areas, including: estate and retirement planning, wealth management, risk management, and tax planning. Members adhere to a strict Code of Professional Conduct, subscribe to standards of best practices, meet ongoing continuing education requirements, maintain appropriate levels of professional liability insurance and are committed to putting their client interests first. The Association’s Web site is www.advocis.ca.