April 23, 2014
I wish the office of the Investor Advisory Committee luck in their new endeavours.
My concerns as a former market participant, and active fair market advocate, involve the "sideways" self dealing that is allowed in today's retail investment sales game.
Systemic investment harm to North Americans, have allowed economies and society to suffer, as have the financial health of millions of North Americans suffered.
I believe part of the problem is a simple "name game" of allowing commission incentivized salespersons and brokers, to misinform the public with names or titles such as "advisor", while not holding the proper license or professional protective duties that are implied by such titles or names.
I have tried to illustrate this fraudulent "bait and switch", in a video that does not do justice to all the information out there, but was the best information I had at the time: found here http://youtu.be/KH6XMXlfdBw
When combined with watered down "best interest" standards, which no longer require that the customer's best interest be served, but need only provide investment "advice" or products deemed to be "suitable", it allows serious financial harm to be done to investors.
Misrepresenting and harming consumers should not be the basis for any regulated industry.
In Canada, the sale of proprietary, (house brand) products, "wrap" accounts, funds made up of other funds, with fees made up of other fees, etc, are cleverly designed and packaged to appear to investors as winning strategies.
Sadly they are winning strategies for the dealer and the salesperson, rather than investors. Up to 26 times more revenue can be generated by some of these harmful yet "suitable" products according to our Ontario Securities Commission.
And yet, the industry still seems to have the power and the influence to do these known harms to North Americans with impunity.
I urge the SEC to set the example of investor protection, by setting clear policies allowing the public to understand the difference between a product salesperson, where the relationship might be one of "let the buyer beware",......and a professional relationship where an undivided loyalty is owed to the investor.
To repeat for emphasis: Simple clarity between salespersons and professionals is lacking and is needed.
Today those lines are blurred and crossed to the harm and detriment of an entire nation, while to the benefit of a few.
www.investoradvocates.ca contains a collection of investment stories, experiences, tricks and traps for consumers. It is hoped that some of these will find receptive ears at the SEC, where true change to benefit investors might be put into place.
Thank you for taking the time to read this and for any positive action you can accomplish on behalf of the public interest.
Larry Elford, former CFP, CIM, FCSI, Associate Portfolio Manager, retired
Lethbridge, Alberta Canada