A Rose By Any Other Name Ain’t Necessarily A Rose

By now you may have already heard of the big scandal with RBC regarding the sale of retirement investment portfolios.

Poorly trained used car-type sales professionals peddling an inferior brand of in-house RBC owned mutual funds cost investors significant sums of money due to high fees and under-performing assets.

This practice has gotten so bad, that one RBC manager lamented the fact that bank tellers are now called client advisors (as opposed to advisers, the difference of which I will explain shortly), and are required to obtain a license to sell mutual funds. “How do you expect a 20-year-old employee who’s getting paid $12 an hour to provide advice?”

I wonder how the bank – and they are not the only financial institution involved in this kind of practice, get away with it?

The answer is “O” versus “E!”

According to the Small Investor Protection Association, there are 121,000 people registered as financial professionals in Canada, of which only 4,000 have a fiduciary responsibility to their clients. They are known as “advisers.”

The remaining 117,000 refer to themselves as “advisors.”

Not that long ago, and before the RBC story broke, I had looked up both words online to see if there was an actual difference. Here is what I found; Adviser and advisor are both accepted spellings of the noun meaning one who advises or counsels. There is no difference between them. But adviser, the older version, is listed as the primary spelling in most dictionaries, and it is about five times as common as advisor in current news publications from throughout the English-speaking world.

Apparently, the source of this information has never worked in the financial world.

Just to be clear, it is not illegal to use the advisor moniker, but it is important for you to know that advisors are not legally obligated to put your best interests ahead of their own. This one letter difference explains why RBC clients who have received bad advice from unqualified “advisors” are up in arms.

My recommendation is that besides looking for the “e” in an adviser, you should also consider whether or not the person offering financial advice is financially well off themselves. After all, if they can’t grow their own nest egg, how will they ever be able to grow yours?