Last week I saw a report on CBC about a common trick used by the big banks which misleads customers by using the term "Financial Advisor", spelled with an "o" vs the industry regulated term "Financial Adviser". There's a difference between a financial adviser and a financial advisor. "Advisers" are regulated and have a legal responsibility to act in YOUR best interest. "Advisors" are not the same, they are employees of the bank who are paid to look out for the bank but lure you in with a similar name.
Not only are the titles misleading with "Advisers" looking out for your interests and "Advisors" looking out for the banks, there is also a large gap in the knowledge and education between the two titles too. "Advisers" are trained industry professionals where-as "Advisors" used to be called Personal Banking Officers at Scotiabank and simply got a title upgrade to the title Financial Advisor. To me this is completely misleading! Most banking officers that you speak with might be able to sell mutual funds and that's it, not only do they not look out for your interests like a true "Adviser" but they are also basically completely untrained in most investment vehicles.
Yes, some "Advisors" at banks are licensed to sell mutual funds but that's it, ask them to explain anything other than the very simple basics of how mutual funds work. Most of the time the bank employee simply does some data entry on their computer and then tells you what mutual funds to choose based on what the computer tells them. Often, they can not even put your investment into a fund that is not within the realm of what the computer advises them to do, that's what happened to Andrea at TD several years ago.
The Marketplace report on CBC about "Advisors" vs "Advisers" really struck a chord with me. I feel it exposed this trick by the banks and passed along some insider information that only those paying attention are privy too. Sure it is blatantly obvious to those that know an "Advisor" is not an "Adviser" but what percent of the population actually knows that? I'll guess it's really small and that the banks are profiting from it.
Are there similar tactics in real estate?
Watching this CBC report got me thinking about how often I see this in real estate as well. Realtors marketing themselves and saying that they have some sort of title that is not true or can't be backed up. There are numerous examples to choose from, "Neighbourhood Specialist", "Condo Specialist" and the "CalgaryReal Estate Board Million Dollar Club" just to name a few.
What about the title "Neighbourhood Specialist"?
Andrea and I routinely receive marketing from three separate Realtors at our home promoting themselves as the "Neighbourhood Specialist". Can all three of them be the "Neighbourhood Specialist" at the same time? Is even one of them a "Neighbourhood Specialist"?...There's not many Realtor designations or specializations that I think are meaningful but if someone is actually a "Neighbourhood Specialist" I think there is value in that; a Realtor who knows a neighbourhood and knows that a view of the city is worth $75,000 more then the home next door because it does not have a view is worth it. Unfortunately, most Realtors promoting themselves this way have no idea what is happening in a neighbourhood.
Just out of curiosity I took a look at the stats of the three agents that market themselves as "Neighbourhood Specialist" in our neighbourhood. I assume that if you are taking the time, money and effort to send out monthly mailings showing you as the specialist and marketing the homes you sold in the neighbourhood / area then you likely have a presence in the neighbourhood.
Guess what? All three Realtors marketing themselves in our neighbourhood as the "Neighbourhood Specialist" are a fraud by my definition. I pulled the sales data for the last year and here's what I found from the 248 sales that took place.
Agent 1 had 8 sales of the possible 248 sales which is 3.2% of the sales in the neighbourhood
Agent 2 had 5 sales of the possible 248 sales which is 2.0% of the sales in the neighbourhood,
Agent 3 had 2 sales of the possible 248 sales which is .4% of the sales in the neighbourhood.
That's a whopping 5.6% of the sales in the neighbourhood by all three of them combined!
Seriously, these are the stats that back up their claims of "Neighbourhood Specialist"... I had a sale and live in the neighbourhood, maybe I should market myself as the area specialist too... It's not only the Big Banks and local Realtors that mislead you in their marketing. Those that should be leading by example do the same thing.
How can Realtors be expected to market honestly when CREA doesn't?
What about the Canadian Real Estate Association (CREA), how can we be upset with local Realtors for misrepresenting themselves if CREA does it nationally on TV? I'm sure you've all seen the ads, the ones where there is a police raid on a house and at the end of the commercial the people say "We didn't use a Realtor" and then the narrator comes on and says that "Realtors have information that you might not be able to find yourself."
Personally, I love the ad, the start feels like a military recruiting video, it's well produced and the quality is high. I also find the punch line really funny but that's cause I am a Realtor... My issue with the commercial is what they say at the end, "Realtors have information that you might not be able to find yourself"...Sure there's truth in that but to suggest that Realtors know who the local drug dealers are and what homes they live in is a bit disingenuous. There is certainly no search criteria for gang clubhouses on the backend software and last time I checked gangs, dealers etc don't really publicize a list of their safe houses.
The other more recent CREA TV ad is equally as funny but is also misleading.
Another well filmed and produced commercial, almost makes me want to join the Hells Angels at the start, then the bikers knock on a door and talk to the home owner.
Biker: "Brother, you move onto our turf you're in the gang. Didn't your Realtor tell you that?"
Home owner: "We didn't use a Realtor."
Again, really funny to me but misleading to suggest that Realtors know information like this. I get it, it's funny and entertaining but a little bit misleading at the same time, suggesting that Realtors have access to information like this at all. I certainly don't know the local gangs turf rules... maybe that's why I don't market myself as a "Neighbourhood Specialist" but this is the type of information I expect a "Neighbourhood Specialist" to know.
Misleading marketing has no accountability
Similar to CBC investigating the misleading titles of bank employees as financial advisors we should also take a look at similar tactics being used in real estate. Most "Neighbourhood Specialists" and "Condo Specialists" rarely have the stats and certainly the knowledge of an area to backup these claims. Even the Canadian Real Estate Association markets Realtors as being "all knowing" about a neighbourhood when in most instances this is far from the truth, be cautious around Realtors marketing themselves as "specialists", there is zero accountability and rarely data to back up their fake titles. If, you are looking for someone who is a "specialist" make sure to do your homework and find out more about what supports their claim and actually makes them a "Neighbourhood Specialist".