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This article appears in the September 2023 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

By calling out dubious industry awards, Canada’s securities regulators can claim a victory for both clients and advisors. In a warning to all registered firms and reps, the Canadian Securities Administrators and the Canadian Investment Regulatory Organization advised they would be taking an increasingly hard line against “prestigious-sounding awards” based on sales, assets under management or revenue-generating performance rather than a financial advisor’s qualifications, proficiency or experience. In some cases, these awards involve paying a fee to participate.

The regulators’ deep skepticism about these awards is evident in the warning, which noted that even when rankings claim not to be based on sales activity, “the actual results… would suggest otherwise.”

While firms and advisors have been warned to remove references to these potentially misleading plaudits from their marketing materials, websites and social media profiles, the regulators said even the publication of award results could be construed as a compliance violation by firms and reps that participated in the rankings.

In other words, avoid these programs altogether. With their warning, the regulators acknowledged that pay-to-play awards and those with murky methodologies are not harmless puffery. “Bullshit is a greater enemy of truth than lies are,” as the recently deceased philosopher Harry Frankfurt wrote in his seminal exploration of the phenomenon.

In this context, investors are put at risk when they’re duped into believing they’re getting advice that has been recognized for quality, when, in fact, an advisor’s award only prizes their ability to generate sales.

That’s antithetical to the business of providing sound advice, and devalues the work of ethical, conscientious advisors.