Set boundaries for assistants

Delegating tasks to staff lets you spend more time with clients.

But if you don’t train assistants properly, they could make mistakes—and put you on a regulator’s radar.

The rules

Unregistered staff “may not approve the opening of client accounts, as this must be done by an approved supervisor,” says Paul Riccardi, senior vice-president of member regulation at IIROC. To become an approved supervisor, advisors must have at least two years’ experience at a registered firm, and also need to complete IIROC’s Branch Managers Course. If they’ll oversee fully registered reps, they must attend the Effective Management Seminar within 18 months of being approved.

Approved supervisors are chosen by their firms to monitor colleagues, adds Riccardi. And, if they oversee advisors who work with institutional clients, supervisors should take IIROC’s Partners, Directors and Senior Officers Course (although it’s not required). People overseeing derivatives trading must take relevant derivatives courses offered by the Canadian Securities Institute.

Under Section 25 of the Ontario Securities Act, unregistered assistants can’t handle trades or provide advice to clients. If an assistant is registered, notes Riccardi, he still can’t take on duties outside his registration category. For example, an investment representative can trade, but not advise, on securities, while a registered representative can do both. Also, newly registered assistants must complete the Wealth Management Essentials Course within 30 months of registration, or that registration will be suspended.

Warning

If your assistant asks for advice about his investments, refrain from making specific recommendations. To provide advice, you’d have to take him on as a client.

Keep staff in line

To help your assistant stay compliant, regularly inform him of your firm’s policies and practices, and explain which tasks he can and can’t perform. As your team expands, it gets more challenging to keep track of the duties and registration levels of every assistant. Still, advisors need to know the rules and “communicate [them] when instructing assistants on day-to-day business,” says Stephanie McManus of Compliance Support Services. “When I started in the securities industry, I was an IIROC (then IDA) prosecutor, and we did find problems from time to time.” Most often, she found assistants filling out parts of KYC documents they weren’t qualified to work on.

She suggests advisors do more than verbally instruct assistants. They should also create lists of dos and don’ts, as well as typical client requests, phone scripts and procedural documents, for staff to reference.

Say a client loses her job and calls to ask how she should deal with her work RRSP. When a client’s in distress, “an assistant may be tempted to offer advice,” says McManus. “But he should directly refer the call to the advisor since the information relates to, and must be added to, that client’s KYC documents.”

This is how assistants should handle all client life events. They can’t update anything other than someone’s basic personal information, such as an address or name. Also, if a client asks the assistant a question about her portfolio, he must decline to answer and follow the advisor’s prescribed steps.

Having procedural documents on file also comes in handy during audits, notes McManus, since they show you’re consistently complying.

If assistants make mistakes, she adds, advisors must follow firm policy, as well as “correct staff immediately. It’s also key for them to keep their compliance department in the loop because, if they’re having a problem, it’s likely other colleagues are as well.”

If that happens, compliance normally sends a firm-wide bulletin to clarify rules. They’d likely also require advisors to call affected clients and go over all KYC documents. If mistakes are found, forms must be updated or recreated.

That way, auditors and regulators will see problems are being flagged and dealt with efficiently.

Katie Keir is content editor of Advisor Group.