Failure to Fulfill the Process Guarantee
Financial advisors who do not fulfill their process guarantee fail to meet the standards required of investment industry professionals.
Good financial advisors are highly trained and regulated professionals who are required to meet or surpass the investment industry’s process guarantee. They must commit to clients to follow a process to ensure that pertinent and complete information is exchanged between them. Legally, this is considered a “contract.” This obligation cannot be delegated to a third party; financial advisors are responsible for their advice.
The process guarantee includes a legal and ethical duty to provide responsible, professional service and honest advice. If your advisor promises you secure for you high returns and “special” protection from losses, you are not getting that quality of service, and you are not being told the truth.
The truth about irresponsible investment schemes and systems is:
- Stock market investments don’t always go up by any guaranteed per cent each year.
- Financial advisors usually earn a fee, which fee comes from the money you invest, whether borrowed or not. Often the fee will be hidden in monthly charges from the investment company.
- If you invest borrowed money, what you pay to cover the interest on the loan may end up being more than what you receive on the investment you make with that loan.
- There is no “system” that is sure to work, and anyone claiming to have one may be breaking the Canadian securities law.
There are three major tasks involved in fulfilling a process guarantee: due diligence, explanation of risks and continual obligation.