When Financial Advisors Mess Up

In the News

Have you put some money aside for retirement and decided to use the services of a financial planner? Their job is to ensure you get the best returns on your investments. But be careful! Problems can occur if you’re not ready for certain risks or receive bad advice.  

A regulated profession  

In Quebec, members of certain professional orders can serve as financial planners. For example, the professional orders of certified professional accountants and certified administrators have an agreement with the Chambre de la sécurité financière (financial security board) permitting them to act as financial planners.  

Persons who do not belong to such professional orders and wish to act as financial planners must be registered with the financial security board and hold a certificate from l’Autorité des marchés financiers (Quebec securities authority). Registration and certification involve many rules. Here are four important ones. 

Persons who wish to use the title and serve as financial planners must 

  • provide you with all relevant explanations and ensure that you have understood them, 
  • provide accurate and complete information, 
  • take their limitations into account and not offer advice that exceeds their level of competence, and 
  • put the interests of their clients before their own interests.   

The element of risk 

In a 2023 case, the financial security board considered a complaint against a financial planner accused of providing bad advice to her client, a doctor with a modest standard of living. The doctor was prudent and did not like taking risks. He transferred all his investments to the financial planner in the hope of getting better returns.  

The board judged that the planner had not properly evaluated the client’s aversion to risk and his profile as an investor. Over several months, the financial planner made high-risk investments, which resulted in losses. The doctor repeatedly expressed concern about the uncertainty of the investments, but the planner did nothing to correct the situation. The doctor finally lost patience and transferred his investment portfolio elsewhere, absorbing the losses.  

The financial planner was sanctioned with a one-month suspension and a $10,000 fine for these and other related facts.  

Insurance policies don’t cover everything 

In a 2018 case, two financial security advisors were sanctioned for providing false information, resulting in their client’s financial loss.  

The advisors made arrangements with an insurance company regarding disability insurance for their client. The coverage excluded mental health conditions because the client had suffered from bouts of depression previously. At the time of signature of the insurance policy, the advisors failed to disclose to the insurance company that their client was now on a medical leave for mental health reasons. Her health situation had changed since the time information was first provided to the company. It is mandatory to disclose such changes to an insurance company.  

The advisors also assisted the client in cancelling her insurance policy with another company. That policy did cover disability due to mental health conditions. 

A month later, the client made a claim for disability insurance with the new insurance company but was refused due to her pre-existing medical condition. She therefore found herself without work income or insurance. 

The advisors were each imposed a fine of $4000 and a two-month suspension. Fortunately, the client received compensation of $3600 from advisors’ employer. In addition, her previous insurance company agreed to resume her disability coverage but at a lower level of monthly benefits. 

For information about public and private insurance plans, see our article Accident, Illness and Disability Insurance  

How to protect yourself

To prevent problems like those mentioned above – and avoid needless worry – you can check whether your financial advisor had any complaints against them. To do this, email the Chambre de la sécurité financière (financial security board) at this email address.

If you wish to file a complaint against a financial advisor, you can file one with the board. For information, see this page.

For cases of fraud, you can file a complaint with the l’Autorité des marchés financiers (Quebec securities authority).