“Too honest to be famous”

With its three sensationalist slogans, the least we can say is that the new advertising campaign of the Montreal chapter of the CFA hits below the belt:

• “Quebec gives its poor lots of help, but who takes care of the rich?”
• “We are investment advisors who are too honest to be famous.”
• “80% of applicants fail the CFA exams. What about your investment advisor?”

These three messages have been plastered on super-sized billboards along major roads in Montreal since Monday, January 24.

According to the new advertising agency CFA Montreal has hired, the campaign has been devised to increase the CFA’s brand awareness, while clearing up any possible confusion with other professional acronyms.

“This creative approach will also illustrate the benefits to consumers of doing business with a financial advisor certified according to CFA standards. Two of the three slogans are a nod to news journalism [!]. One of them follows the media coverage that has exposed the questionable practices of some in the field of investment securities,” the agency said in a statement.

For people who boast about being examples of integrity, they have certainly failed to ask the staff at their newly chosen agency, Republik, if there was anyone from the CFA in their ranks!

Because we now know, by visiting CFA Montreal’s website, that CFA charter holders are irreproachable in matters of integrity. Similarly, one could never imagine an advertisement bearing the name of the CFA attempting to discredit other professionals in the financial services industry. And with such demagoguery!

Here is how they describe themselves: “CFA graduates are distinguished by their professionalism, ethics and the quality and integrity of their financial recommendations.”

Ladies and gentlemen of the CFA, we congratulate you warmly on your standards, but did you forget to speak about them with your board of directors and its chairman, Vincent Fournier, before embarking on a smear campaign like this?

We may also wonder if the former La Presse journalist, now senior representative and director of the Montreal Regional Office (Financial Markets) of the Bank of Canada, Miville Tremblay—who was also president of the CFA Montreal—would have allowed such a campaign?

Recall that in July 2009, Mr. Tremblay was under the spotlight for having endorsed the appointment of Mario Lavallée, who served as “administrator” for Norbourg and Vincent Lacroix. “We have examined his role at Norbourg with great care and in great detail, and consulted with many people. Our conclusion is that he was a victim in this story, not an accomplice. Mr. Lavallée’s conduct has been irreproachable,” Miville Tremblay said at the time.

It is important to note here that Mr. Lavallée has never been accused of anything in the Norbourg affair. The example serves, rather, to demonstrate that even if you’re a CFA, you can’t see everything, even within the company you work for. Nonetheless, if we presented these facts to the Norbourg investors in an ad campaign asserting that a CFA designation is a guarantee of security, there probably would have been a few cynical comments in the room.

But since you’re talking about Norbourg, the CFA, integrity, ethics and professionalism, and since you seem to want to lecture some 40,000 advisors by the muzzle of a hyper-creative agency loosely drawing from news headlines, you will not begrudge my jogging your memory of a few additional pieces of information on the biggest ever financial fraud in Quebec, and which may have escaped you.

In September 2004, at a restaurant in Quebec (the Michelangelo), the Norbourg management team met the advisors who had distributed the Evolution funds to reassure them on Norbourg’s vision and confirm them in their choice. Here is how the advisor Gilles Viel, who was present that evening, described the scene to me: “In September 2004, the Lacroix team convened, at great expense, all the Evolution fund representatives from Montreal and Quebec, to present to us the whole management team directed by Vincent Lacroix M.Sc.: Serge N. Beugré, M.Sc., CFA, chief strategist and the man behind Norbourg’s management style; Claude Lemieux, arbitrage advisor; Mr. Pierre Therrien, M.Sc., CFA, director of financial engineering; Sebastien Roy, strategic analyst; Patrick Poisson, CFA, bond manager; Philippe Beland, financial engineering analyst; Deschêsnes Mathieu, analyst; J.S. Brossard, analyst; Benoit Crispin, analyst; Claude Boisvenue, MBA, Adma.A, PFC, Ing. in management concepts; and Josée Melançon, programmer. The presentation ended with cocktails and a kind of collective assurance that the assets were under good management,” explains Viel.

It is not, therefore, the number of CFA advisors that was lacking at Norbourg. Among them was Serge N. Beugré, who now faces 174 charges ranging from fraud to money laundering to forgery and conspiracy. Mr. Beugré had signed false documents, but maintains he was deceived and knew nothing of the scheme. The maximum penalty under the criminal code is 14 years for fraud and 10 years for money laundering and forgery. Mr. Beugré was immediately removed from the CFA in 2005.

A professional title, regardless of whether it’s the “gold standard,” does not automatically guarantee the honesty of the person holding it. Everyone agrees that CFAs, in general, have reason to be proud and are highly skilled professionals who are a credit to the industry. It may be hard to admit, but CFAs are not more immune to fraud and other blights to their integrity. Securities agents, financial planners, and members of La Chambre de la sécurité financière all have to adhere—surprise, surprise—to a code of ethics. The code on the CFA’s website does not appear to be more severe than that of other industry players. Of course, the CFA conducts more sophisticated studies on portfolio management, for example, and their classes are highly specialized and their exams very demanding; but ethics, professionalism, and integrity are not measured by a piece of paper; they are a question of moral rectitude.

This whole scenario, in which financial advisors are once again used to crassly take advantage of the complete ignorance of investors by making them swallow anything and everything, to the benefit of 1% of market consumers, is, quite frankly, pathetic and disgraceful! The Montreal CFA has about 2,000 CFAs. Most do not work with a clientele of small investors. An investor who tries to find a CFA advisor may wind up despairing that there are no trustworthy advisors, if he buys into this ad campaign. And if he looks for the CFA designation in the famous registry of the AMF, what will he find? “No CFA designations allowed!” Must they change their slogan to, “We are investment advisors who are too honest to be recognized by the AMF”?

Can you imagine psychiatrists saying such nonsense about psychologists?

Once again, you need to bring out the numbers.

In 2005, 15 complaints were brought before the disciplinary committee of the College of Physicians, which covers 17,477 doctors—a rate of 0.09%. La Chambre de la sécurité financière had 26 complaints on 28,647 members, a rate of 0.09%. With the latter there were a total of 21 disbarments, suspensions or prohibitions of practice, for a rate of 0.07%, while for doctors there were 8, a rate of 0.05%.

Even if, in recent years, some advisors like Carole Morinville have made headlines, the infraction rate remains well below some other professions. But advisers are an easy target, and the mainstream media, which knows little about the industry, often has a field day with it, without distinguishing between impostors like Earl Jones and license holders—and it gets out of hand. But when an organization as serious as the CFA plays this game, when people who work within the industry make wild accusations, we cannot overlook such a gross calumny.

I remain convinced that the vast majority of CFAs in Quebec do not share this propagandistic caricature of financial advisors in Quebec peddled by the Montreal CFA Society.