In the business development period and throughout their relationship with a client, the advisor must be careful when promoting the products and services they offer. An advisor’s representations to their past, current, and future clients must always adhere to regulations. This includes the requirement to ensure that what they offer to clients is consistent with what they state in an advertisement.

The following is a list of what the advisor cannot do in their communications to clients:

  • Make incomplete, false, misleading, or potentially confusing representations about the nature of products and services they offer

    These representations may lead a client to entertain expectations that cannot be met, or to choose an inappropriate strategy or product. This could have serious consequences, such as insufficient preparation for retirement or risk of financial losses that the client is not ready to assume.

  • Make a false statement regarding their competence level or the efficiency of their services or the firm for which they work
  • Promoting a multidisciplinary approach emphasizing the competencies of members of their team or network, for example, is a completely legitimate practice. However, the advisor must avoid including competencies they don’t have in their own personal statements.
  • Disclose their income and financial performance
  • Share statistics without indicating the source or reference

Promoting products

The following is a list of what the advisor cannot do in their representations to clients about products they offer them:

  • Exaggerate the extent of benefits offered by the products and minimize their cost, risk, and other disadvantages

    The advisor must provide objective, factual, and complete information. They must place the same emphasis on a product’s advantages and disadvantages, including risks and fees.

  • Advertise a product without first obtaining the authorization of the company that sells the product
  • Promise guaranteed returns on an investment or suggest results that the investment is unable to achieve

    The advisor must not use non-representative projections or statistics that suggest unjustified or exaggerated returns or without indicating the relevant hypotheses that led to these returns.

  • Disclose the returns on a product without mentioning that past returns are not a guarantee of future returns

    To demonstrate products’ performance, the advisor may rely on past returns by presenting data or illustrations. In this case, they must show their long-term changes to the client. Using official information such as a prospectus, information booklet, or Fund overview may help the advisor present their products objectively and help the client compare certain indicators.

Below are specific examples of situations that arose in the CSF’s disciplinary committee decisions in which the insurance advisor made false representations:

  • The advisor confirmed to a client that a product was offered only to high-level clientele, that it was currently on promotion for a limited time, and that if potential clients purchased it, they could take advantage of additional benefits, although this was false. (Decision CD00-0446)
  • The advisor provided incorrect and incomplete information on the type of product purchased and the applicable guarantees. (Decisions CD00-1020 and CD00-0535)
  • The advisor made false, incomplete, misleading, or potentially error-causing statements on the amount of premiums due to keep an insurance policy active. (Decision CD00-0851)
  • The advisor made false representations during the purchase of a life insurance policy by providing an incorrect and misleading comparison table of two policies, in particular regarding premiums due and the value of the fund. (Decision CD00-0727)
  • The advisor sent clients mass e-mails that contained incomplete, false, or misleading information about segregated funds that they held through them, indicating that their investments were fully guaranteed without specifying the conditions regarding the application of this guarantee. (Decision CD00-0964)

Below are specific examples of situations that arose in the CSF’s disciplinary committee decisions in which the representative of a mutual fund dealer made false representations:

  • The advisor made representations about their fees that could cause the client to make errors, indicating that they would be reimbursed by the investment firm. (Decision CD00-0851)
  • The advisor gave inaccurate and incomplete information on transactions completed. (Decision CD00-0535)
  • The advisor gave false information about cashing a cheque on which they forged the date. (Decision CD00-1014)