How Do I Know my Financial Advisor isn't Going to Steal my Money?

Although fraud can certainly occur, there are many safeguards that any reputable firm will put in place.

A financial advisor can not easily wire funds to his or her account; there are controls designed to prevent this. The advisor would have to forge the client’s signature in order to effectuate a transfer to their own account. This, by the statutory definition, would be classified as fraud.

Here are some key steps to help you evaluate the trustworthiness of your financial advisor:

1. Core Values: Inquire about your advisor’s core values. A person of integrity should be able to articulate their values.
2. Background Check: Research your advisor’s background using the Canadian Securities Administrators (CSA), your Provincial Securities Regulator & Canadian Investment Regulatory Organization (CIRO) websites. Look for any history of non-compliance with regulations like hearings, enforcement actions and disciplinary measures. An advisor with a track record of non-compliance may not prioritize your financial well-being.
3. Fiduciary Duty: Ensure your advisor is a fiduciary. Fiduciaries are legally obligated to always act in your best interest, regardless of their own interests.

Consumers would be well-advised to pick a financial advisor who is with a reputable and well-established firm. Such firms tend to have robust controls, policies, and teams of professionals who are focused on preventing fraud and making clients whole if such incidences that may occur. It’s a good idea to research the firm you are doing business with, prior to beginning the relationship, to ensure there are operational procedures in place to prevent fraud and wrongdoing.

Remember, trust your instincts. If something feels off, seek a second opinion or consider changing advisors. Your financial well-being is too important to leave to chance!

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Disclaimer:

Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Eric Muir and Derek Lacroix and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member Canadian Investor Protection Fund.