{"id":1331,"date":"2017-04-27T14:52:05","date_gmt":"2017-04-27T14:52:05","guid":{"rendered":"http:\/\/wdsinvest.com\/?p=1331"},"modified":"2026-02-17T21:44:57","modified_gmt":"2026-02-17T21:44:57","slug":"caveat-emptor-state-fiduciary-standard-canada","status":"publish","type":"post","link":"https:\/\/wdsinvest.com\/fr\/caveat-emptor-state-fiduciary-standard-canada\/","title":{"rendered":"Caveat emptor \u2013 the state of the fiduciary standard in Canada"},"content":{"rendered":"

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In life certain things are taken for granted; assuming a standard of care when dealing with professionals is usually one of them. For example, when searching for a new doctor there are many things to consider before making your choice: clinic location, tenure, specialization, bedside manner, etc. Whether a doctor adheres to a fiduciary standard – an obligation to put your interests first \u2013 is unlikely a consideration. In your mind it\u2019s a given, and rightly so. Overarching principles of practice ground the specific duties of the individual physician in Canada. The relevant principle of The College of Physicians and Surgeons of Ontario states (link<\/a>), \u201cPhysicians have a fiduciary duty to their patients\u2014because the balance of knowledge and information favours the physician, patients are reliant on their physicians and may be vulnerable. The patient must always be confident that the physician has put the needs of the patient first. This principle should inform all aspects of the physician\u2019s practice.\u201d<\/em><\/p>\n

So how about your financial health? Can your search for an investment professional be done assuming a uniform best interests standard of care? Or put bluntly do all investment advisers have a legal obligation<\/u> to put your interests above all else?<\/p>\n

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The answer is simply no despite what 82% of older Canadians may still believe (link<\/a>).<\/p>\n

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According to the October 2016 report (link<\/a>) published by the Small Investor Protection Association, there are nearly 122,000 total registrants in the Canadian investment industry; however, only around 4,000 are registered in the \u201cAdvising Representative\u201d category where a true fiduciary duty to clients is a legal obligation. Instead the vast majority are registered as \u201cDealing Representative\u201d. An excerpt from The Canadian Securities Administrators\u2019 (\u201cCSA\u201d) definition (link<\/a>) sheds light, \u201cDealing Representative is a sales person \u2013 what they can sell depends on the firm they work for and their registration\u201d<\/em>. CSA is an umbrella organization of Canadian provincial and territorial securities regulators.<\/p>\n

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A July 7, 2016 post by the Alberta Securities Commission (link<\/a>) further explains that dealing representatives are generally licensed to sell products sold by the firm they work for and are obligated to provide advice on the suitability of those products for the client\u2019s circumstance. The post then compares this to purchasing a car from a dealership where the salesperson is not required to know about, or recommend, any make or model that is not in its inventory that might meet your needs as well, or better.<\/p>\n

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Our intention is not to diminish the role of any specific segment of Canadian investment advisers. Likewise, we do not infer that dealing representatives don\u2019t have their clients\u2019 best interest truly at heart. Such generalizations would be untrue and unfair. What we do draw attention to; however, is that you should not assume an adviser is required to act in your best interest \u2013 when, in fact, the majority of investment professionals in Canada are not.<\/p>\n

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Until a best interest standard is mandated across all levels of registration in the Canadian securities regulation landscape, it remains a buyer beware market. The onus is on you to decide whether you are dealing with the right type of investment professional to meet your needs. This is best done by asking the right questions and then checking the registration status of your current or potential adviser. Below are more resources to start with:<\/p>\n

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