B.C. planner still irked at IDA

(March 10, 2004) It’s been a month since Bernie Geiss resigned from the securities industry in a dispute with his dealer and the IDA over financial planning. Since then, the B.C.-based fee-for-service planner has received some clarification from the brokerage industry association, but hasn’t changed his mind about quitting.

The disagreement centres around an IDA rule introduced last year that makes member firms responsible for supervising the financial planning activities of agents and employees.

Geiss says under Berkshire’s interpretation of the rule, all his financial plans would have to be approved and invoiced through the dealer.

At first, the Vancouver planner wasn’t sure whether to blame Berkshire or the IDA for his predicament, but after corresponding with IDA legal experts via e-mail, Geiss is convinced that Berkshire was simply following the rules.

“It seems like there was a bit of hot potato being played with the IDA saying that it was Berkshire’s interpretation of the rule that created my problem, not the IDA,” Geiss says. “The response [received from the IDA] indicates that Berkshire was not really the culprit, it is, in fact, the IDA.”

The IDA says that while financial planning is a securities-related business, and therefore the responsibility of firms to regulate, it’s up to those firms to decide how to follow the rule. Dealers can put policies and procedures in place to ensure compliance, but also have the right to request approval of every financial plan.

Geiss believes the IDA is “skirting the issue,” adding that Berkshire’s enforcement of the rule is identical to the IDA’s interpretation. “The IDA ultimately has the big hammer, Berkshire has to comply. But the rules are sufficiently vague to allow the IDA to make up their mind as they go.

“This confirms what I suspected all along.”

The issue of investment recommendations is also a worry for Geiss, who sees the IDA rule as having broader implications for advisors.

The IDA response suggests that asset allocation is considered a securities-related activity, Geiss says, even when there are no specific investment recommendations.

Related News Stories

B.C. planner quitting securities industry in regulatory dispute Geiss story unites advisors in the Talvest Town Hall

“[Asset allocation is] what I do, and if they say that’s securities-related, then every single insurance agent, planner and mutual fund advisor who is not securities licensed is offside according to the IDA.”

Advocis has also taken up the cause, expressing concern that the IDA may eventually attempt to claim regulatory authority over all financial planning.

“Advocis feels strongly that the IDA is not a suitable organization to regulate all financial planning nor that it has the capacity or experience to do so,” wrote Beverly Brooks, Advocis’s vice-president of public affairs, in the February issue of Forum magazine.

“Advocis has been great,” says Geiss. “They are clearly on the side of the independent advisor.”

As for his transition out of the securities industry, Geiss says it was smooth, but hard work. The reaction of clients was mixed — some were upset with Berkshire, some with the IDA, he adds. “A lot of people felt betrayed that I resigned. But I want to keep them as clients and I still do their financial planning.

“I’m happy that it’s over.”

---

What do you think of Geiss’s stance? Is the IDA attempting to move into the regulation of financial planning? Share your thoughts in the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(03/10/04)

Doug Watt