CSA Notice - Adviser

CSA/ACVM

Canadian Securities
Administrators

Autorités canadiennes
en valeurs mobilières

January 15, 2001 For Immediate Release

Take time to know your adviser before investing

VANCOUVER - As RRSP season approaches, Canadians should take time to research the qualifications of the people offering them financial advice, say Canada's securities regulators.

"This is a busy time of year with many Canadians considering investment options and you don't want to be rushed into unsuitable decisions," said Doug Hyndman, chair of the Canadian Securities Administrators, an umbrella organization of Canada’s 13 provincial and territorial securities regulators.

"You need to have confidence in the knowledge and skills of your financial adviser."

Except in limited circumstances, anyone selling or providing advice on investments must be registered with their provincial or territorial securities regulator. They can describe themselves using a variety of titles such as investment adviser, broker, registered representative, mutual fund salesperson, financial consultant or financial planner.

All registered individuals must have some educational qualifications. However, some have more qualifications and are authorized to sell a wider range of investment products than others. Investors should ask questions about their adviser's qualifications as well as asking about the investments they are selling.

Investors shouldn't let their adviser sell them products they don't understand, Hyndman stressed.

"Ask your advisor why they recommend particular funds or securities. Ask how much the salesperson is earning in commissions. Do they have an ulterior motive for selling a particular product? Know exactly what you are paying for," Hyndman said

Investors can contact their provincial or territorial securities regulator to see if their adviser is registered. If the person selling you an investment isn't listed, it likely means they aren't registered and that should raise an immediate red flag.

"Investors are trusting these people with their money. They have a right to demand integrity and honesty, as well as knowledge, experience and good service," Hyndman added.

Investigate before you invest - know who's giving you advice

Don't be afraid to ask questions. Don't invest in anything you don't understand.
Make notes of all conversations with your adviser. Your provincial or territorial securities regulator can provide you with a free Investor Education kit that provides a checklist for recording conversations with your adviser. These notes could help protect you if something goes wrong.
Be wary of certain types of behaviour or sales pitches. Legitimate and qualified advisers don't need to rely on the "hard sell" or "hot tips" to retain clients.
An adviser should not try to pressure you into an investment decision. If they do, walk out of the room or hang up the phone. No reputable adviser would engage in high-pressure sales tactics.
Be skeptical if someone tells you there 's no written information about the investment. When someone uses that line, it's a sure sign there's something about the investment they don't want you to know.
Be wary if you're told of an opportunity to earn uncommonly high returns. High returns usually mean high risk.
Ask the person recommending the investment if they have a personal interest in the sale. The product may not be suitable for you and they may be promoting it because they earn higher commissions on that product.
Try to do as much research as possible. Don't rely on a person's word or a so-called "hot tip." Every investment should stand up to hard rational scrutiny.

For more information, please contact:

Nancy Stow
Ontario Securities Commission
(416) 593-8297

Dean Pelkey
B.C. Securities Commission
(604) 899-6880

Denis Dubé
Commission des valeurs mobilières du Québec
(514) 940-2163

Bonnie Beswick
Alberta Securities Commission
(403) 297-2664

Ainsley Cunningham
Manitoba Securities Commission
(204)-945-4733 Suzanne Ball
New Brunswick Securities Administration Branch
(506) 658-3117

Nancy Stow Ontario Securities Commission (416) 593-8297	Dean Pelkey B.C. Securities Commission (604) 899-6880
Denis Dubé Commission des valeurs mobilières du Québec (514) 940-2163	Bonnie Beswick Alberta Securities Commission (403) 297-2664
Ainsley Cunningham Manitoba Securities Commission (204)-945-4733	Suzanne Ball New Brunswick Securities Administration Branch (506) 658-3117