Do advisors owe clients a duty of care?
In a recent case where Norah Cosgrove of Ottawa challenged her advisor on her investment accounts in small claims court, one of the defense statements submitted by the investment firm's lawyers was something to the effect that they felt they did not owe this 90 something year old client a duty of care.
Reading it gave me the impression that they were attempting to "wriggle" away from responsibility on this account, due to the technicality that the client had not signed over total discretion on the account. This, despite having terminated the advisor responsible and supposedly for some cause in relation to this case. Since 90% of the investment accounts in Canada would be similar to this elderly client's account, are we to infer, contrary to industry advertising and promotion, that Canada's largest and most highly trusted corporations truly feel they owe clients no duty of care? No duty to place their interests first?
Unfortunately this seems to be the case, as difficult as that sounds from an ethical standpoint. More and more investment employees are standing up to (or stepping away from) an industry that according to Bank of Canada governer David Dodge, has a worldwide reputation of being the lawless, "Wild West".

This "wriggle ability", strikes this writer as being a position that should not be supported if we were to look carefully at the promises that the industry makes to clients overall. Courts have held professional advisors to a very high standard, and often to a fiduciary standard where there is a level of trust placed in the hands of the advisor, a level of vulnerability on the part of the client, and other guidelines. In fact, when an 80 or 90 year old widow (or anyone for that matter) comes to a someone representing themselves as a professional advisor, the relationship very often immediately becomes one of total faith and trust in that advisor. It can be no other way. The client is often very uninformed as to the intracacies of investing, the advisor claims to not only be a professional, but also an expert to guide the client. Any statement to the contrary is denying the obvious. Denying the obvious is either lying, or misleading and should nto be tolerated by the largest corporations in Canada any longer.

When I was an investment person in the industry I would not accept a client who would not take my advice, much like a doctor may not accept a patient who did not follow the doctors advice. If an advisor is claiming to be a professional (and not simply a salesperson) they will do no less.The relationship often becomes very quickly one of a vulnerable, trusting soul, becoming quite reliant upon the strength, wisdom, experience and skill of the professional. If that professional then chooses to abuse the trust placed in them and put their interests ahead of that of the client, the entire system comes into question. It happens very easily of too often.That is what we are seeing in the newspapers on an almost weekly basis, and it should be telling us something is wrong and it is time for a change.

I will wrap this up here, with a promise to explain further in my next blog the topic of just how dependant and vulnerable an elderly client may become on the advisor they deal with. Written in the interests of righting wrongs. Thanks for reading along. If you like what you read, pass this site to those on your mailing list and we will change things for the better. If you don't like what you read, feel free to share your thoughts. I have been wrong before and probably will again. I welcome the chance to learn and grow.