A recent enforcement case highlights why it’s important to understand your advisor’s authority. Advisors are not permitted to make trades for you without your explicit permission unless they’re licensed for discretionary trading and you’ve provided written consent. In this case, a former RBC Dominion Securities advisor entered over 23,000 trade orders for 33 clients without their consent or prior approval. While most clients saw significant gains, a few suffered losses, and the advisor generated almost $4.5 million in total commissions.
The advisor was ultimately sanctioned by CIRO for breaching securities rules by conducting high-risk, speculative discretionary trading without prior authorization. He was fined, ordered to pay back some of his commissions and was kicked out of the industry.
Unless your advisor is specifically licensed and authorized for discretionary trading—and you have agreed in writing—they must get your consent before every trade. If that’s not happening, it’s a red flag. Always ask your advisor how decisions are made—and make sure you’re in control.