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There are two different kinds of investment advice. Most investors need both types. You may need help in deciding exactly which investments to buy. This is “specific investing advice.” But you often need to know more-general things first. This “general investing advice” includes:

  • when to invest
  • how much to invest
  • what general types of products to invest in
  • what registered accounts to use
  • when and how to take your money out (disinvest)

Specific investing advice is regulated by the Nova Scotia Securities Commission (NSSC).  Only people registered to sell you investments are allowed to help you decide which specific securities to buy. This can be helpful but can also be a problem because sometimes you want advice from someone who is not selling.

General investing advice is part of what is known as “financial planning.” Sometimes it is called “retirement planning,” since almost everyone who invests is saving for retirement. But financial planning is about more than investments and retirement. It can include advice about budgeting, paying down debt and managing your money. Financial planning can include a plan for investing, but does not involve advising on which specific securities to buy. It makes sense for you to have a financial plan before you get advice on which securities to buy.

In Nova Scotia, anyone can give you financial planning advice. And anyone can call themselves a financial planner. Financial planning advice is not regulated in Nova Scotia. There is no government agency like the NSSC to regulate the people who do this. Only specific investing advice is regulated. Some provinces are looking into regulating financial planning. Nova Scotia might follow this path as well.

Financial Planning by Advisors/Registrants

Advisors/registrants in Nova Scotia know consumers need and want general financial planning advice. Most will give you this advice when they work with you. But their main goal is to sell you investments. Financial planning advice from advisors/registrants is often offered as a free service. This means they do not ask you to pay them to do a financial plan for you. This can be appealing because everyone likes to get something for free.

Doing a good financial plan takes a lot of work and skill. So why would an advisor/registrant do this for you for free?

They do it because if you like the plan you are likely to let them carry out the plan for you. This means you will buy investment securities from them. They will help you decide which products to buy. When you buy, they make money. They might earn a commission for selling a specific investment product. Or they might be paid every year as long as you own the investment.

This can be complicated. It may not seem like you are paying them at all. Fees can be embedded in the cost of the investments where you can’t see them. Or they can be deducted from your account and not be noticed by you.  But the more fees you pay, the less you earn in return on investment. This is an example of a conflict of interest we discussed in the Investor Rights section of this guide. We also talked about embedded fees in the Fraud and Other Concerns section of this guide.

You should be careful when you work with an advisor/registrant and take their advice. Think about talking with other financial professionals as well. In this section of the guide, we will talk about things to watch out for and how to find other financial professionals to help you.

Confusing Job Titles

People giving financial and investment advice in Nova Scotia can call themselves whatever they want. This is true for people who are registered to sell securities and for people who are not. You can’t tell from the title on a business card or in an advertisement whether someone is registered to sell securities. You can’t tell which products they can sell. You can’t tell what education or experience they have.

In the Investor Rights section of this guide we talked about different categories of registration. Someone might be registered in a category that only allows them to sell a narrow range of products. If their category of registration was on their business card, you would know what they can sell.  Or you could find out by looking up the registration category on the NSSC website. But the category of registration is not on advisors’/registrants’ business cards, or advertised.

Different categories of registration also mean an advisor/registrant has passed certain courses or exams or has certain experience. Without knowing their registration category, you can’t tell if they simply passed the basic exam for selling securities or if they have more advanced education or experience.

This video from the Investor Rights section of this guide will remind you about the different categories of registration.

Almost 14,000 people are registered with the NSSC. More than 85 percent are registered as dealing representatives.  This is a salesperson category of registration. But you will likely never see the word “salesperson” or “dealing representative” on their business card or in an advertisement. Many of these people work for firms that can sell only mutual funds. But you probably will not see this on a business card either.

confusionInstead, almost all advisor/registrants use the terms “Adviser,” “Advisor,” “Planner,” or “Consultant.” Words like “Financial”, “Retirement” or “Wealth” are placed in front of these words to give titles like these:

Financial Advisor
Retirement Advisor
Wealth Advisor
Financial Planner
Retirement Planner
Wealth Planner
Financial Consultant
Retirement Consultant
Wealth Consultant

These titles emphasize general financial planning advice, not sales of investment products. They make you think this person can help you get wealthy or meet other financial goals. Sometimes a word like “Senior” or “Executive” is used in the titles as well. “Senior” can make you think the advisor/registrant has a lot of experience. But this is not always true. “Executive” can make you think that you are important enough to be working with someone special.

Advisors/registrants do not advertise that they can sell only certain types of investments, such as mutual funds. Their job titles do not tell you if they can sell and advise on one type of investments or on many types.

If advisors/registrants used their category of registration in their job titles you would be better informed. For example, the title “Mutual Fund Firm Dealing Representative” would remind you of two things. First, that this person is a salesperson paid to sell to you. And second, that what they can sell to you is mutual funds.

Nova Scotia has not yet looked into the issue of confusing or misleading titles, but some provinces are doing this. For more information, you can read this August 2019 comment letter to the Financial Consumer Affairs Agency of Saskatchewan (FCAS). Read this if you would like to learn more about this topic.

pdf Letter to FCAA Kenmar Associates  (503 KB)

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