Why So Many Top Financial Advisers Are Suddenly Being Fired for Cause
Over the past six months, my firm has represented an increasing number of financial advisers from Canada’s largest banks and investment companies who have found themselves the subject of sudden internal investigations culminating in dismissal for cause. These have generally been advisers with books of business in the hundreds of millions of dollars or more.
None were accused of theft, fraud, or misconduct that endangered client assets or even breached the bank’s confidentiality. The allegations generally involved policy breaches, disclosure issues, communications concerns or other code-of-conduct violations that, while serious in some instances (but entirely trivial in most), would historically in no way be viewed as career-ending events.
The reality is, given the hundreds (or thousands) of potential infractions of most banks’ codes of conduct, if an adviser is targeted, a bank can easily come up with some minor violation to accuse them of, if it is so inclined. And in all of these cases, the banks were inclined. The accused have generally been highly successful but difficult employees who stood up for their clients’ interests when they diverged from the bank’s policies, such as when a new policy increased profit at the client’s expense.
A Pervasive Pattern
The pattern has become pervasive. The advisers come from different banks. The circumstances differ. Yet the process looks remarkably similar. The adviser is suddenly called into an investigation with no foreknowledge, or even suspicion, that anything is wrong. An external investigator is present. The adviser is questioned about events that might be months or years old and likely almost forgotten, and is not even given the benefit of looking at their own records.
A lengthy investigation follows. And, as is all too common nowadays, the external investigator will come up with a result the bank wants them to come up with, presumably to ensure repeat business.
Unfair Process
The process is fundamentally one-sided. None of the procedural protections of a judicial trial process are provided. The advisers generally don’t have a lawyer. They don’t get to ask questions of the bank. They do not receive complete, let alone adequate, details of their supposed infraction. The bank does not have to show them any documents, but the adviser must produce everything that is asked for – and the bank has access to all of their records in any event.
There is no fairness or reciprocity in the process. The investigator works to build a case so that, by the time the adviser sues, they are already severely handicapped. They are either damned because the bank concludes they were not truthful or because they did not fully respond, and that by itself is alleged to be cause.
