Time to open up the NRD

About 10 years ago, when I still lived in the States, I got tired of a broker I’d been working with.

He’d tried to argue with me about a couple of transactions I’d ordered: And seeing he was only registered as a BD and not an investment advisor, I concluded that wasn’t his job. Further, the stock he’d practically begged me not to sell tanked two days later. So I went shopping.

What an eye opener.

My first meeting ended when I told the prospective advisor she was ignoring my input on risk tolerance and was just plugging in numbers to suit her own sales needs. As I watched this charade, I began toying with the idea of actually opening an account just so I could find out firsthand what it was like to file a suitability complaint. In reality, though, who has time for that?

A meeting with a second advisor was equally disappointing, but the third firm I talked with seemed more professional. The advisor asked real planning questions, and gave me good advice about how best to take my family wealth into Canada – including some instructions about how to ensure I’ll be able to claim my U.S. social security when residing abroad.

And then, when it came time to get serious, the advisor wrote a series of numbers down on a piece of paper and handed it to me. “That’s my CRD number,” he said. “You can look me up.”

U.S. investors have had the advantage of being able to look up a broker’s Central Registration Depository info for several years now. Good brokers see it as a selling point. If they have nothing to hide, they’ll show you. And, if a broker refuses to give out the information, that’s a huge red flag.

It’s an advantage Canadian clients don’t enjoy. And that’s a shame, because Canadian investors, like their counterparts worldwide, are at a critical juncture that will determine whether they stay with the equity markets or shift large amounts of assets into what they perceive to be secure investment vehicles.

I attended a recent industry powwow at which a speaker referenced a study showing only 50% of investors are aware the markets are rebounding. That means 50% are still in the dark. Advisors need to be asking themselves if those 50% are among their clients, and then start working the phones to ensure the investors for whom they act as fiduciaries are aware of emerging opportunities.

By all statistical measures, clients are still engaged in a flight to safety at the very time when they should be turning the boat. Data from several industry analysts indicate there’s vast amounts of client wealth stashed in cash equivalents while investors decide whether they want to re-enter the equity game.

It’s up to you to manage this transition in ways that will help restore clients’ faith in the capital markets and in the value of the advice you offer and implement.

As last fall’s market turmoil begins to fade, some of you are finding clients hungering for knowledge about how their plans are put together. And, due in part to recent high-profile scandals, some clients are also getting curious about how you’re registered, and whether or not you’ve been the subject of client complaints or regulatory discipline.

That being the case, it’s time for the powers that be to open consumer access to Canada’s National Registration Database. Advisors should be asking the regulatory bodies that control NRD access why the veil has not yet been lifted. That, after all, was the plan when the database was created. What’s the holdup?

Opening of the NRD will provide a powerful tool to help sell your most precious commodity: your honesty.