Advisor and investor advocate explains what brought him to his new firm
John De Goey’s latest career move was a long-time coming. The portfolio manager at Designed Wealth Management shifted into his new role six months ago, seeking something he says he couldn’t get from the independent advisory firms he’d previously worked for: independence.
In part De Goey’s quest for independence revolved as much around his work as an outspoken investor advocate as it did his direct work with clients. Nevertheless, the advisor found himself consistently managing communications from his past firms that did not align with his strongly held beliefs about investment strategy. At various points in his career, when his views diverged from stated corporate outlooks, De Goey found himself without any recourse but to leave.
“You can’t use the word independent and then have it mean something else in practice,” De Goey says. “But sometimes my position is not part of the mainstream…When people like me point out that the emperor has no clothes, and ask questions like ‘what about these high cost mutual funds, wouldn’t we be better off using a lower cost index fund or an ETF?’ the industry will shush me and say that’s not appropriate.
“I think the industry likes to gloss over certain things that are self serving to the industry…the problem is that that firms are the judge, jury, and executioner of what is and is not compliant.”
Many of De Goey’s past periods of acrimony with his firms came down to conflicts over then-IIROC rule 29.7 subsection one which, among other areas, sets the standard that no registered person in the industry can say anything that is “false or misleading” in a communication. The trouble is, when it comes to matters of outlook, opinion, or interpretation De Goey says firms can decide for themselves what is false or misleading, and what isn’t.
De Goey notes, for example, a public communication by the chief strategist of his then-firm which said, “we believe we’re heading into a stock picker’s market.” De Goey, for his part, does not believe in active management and has written and spoken widely in favour of passive strategies. He shared a research paper with his firm demonstrating underperformance by actively managed strategies compared to passive management. He included that research in a set of six articles he was writing for an external publication. His firm, however, cited rule 29.7 subsection one, and refused to approve the articles.
Frustrated, De Goey went to a former VP of enforcement at IIROC (now CIRO) for an informal chat about his options. That VP told him, simply, that his compliance department was the sole enforcer of IIROC rules and there was no way for De Goey to appeal. His only options for recourse, she said, would be leaving his firm or suing his firm.
“I’m just one voice who’s trying to speak out. I’m not trying to cause trouble, I’m trying to tell the truth,” De Goey says. “I actually like truth, but the industry doesn’t. The industry likes profit. So when truth gets in the way of profit, the industry will find a way to marginalize those who are hellbent on telling the truth. That’s why I’m at Designed [Wealth Management] now, because Designed does not do that.”
De Goey notes that Designed is not necessarily a large or established player in the advisory space. The firm was founded by former leaders at Aligned Capital, which was purchased by CI in 2020, and De Goey says the leadership at Designed goes out of their way to tell their advisors ‘we’re not going to tell you what to do or how to think.’
Designed’s compliance department, De Goey says, still ensures his writing is true and accurate, but in matters of interpretation or well-researched argument, they won’t get in his way. He explains that the approach at Designed is to allow advisors to speak their minds, while the firm provides necessary back-office support.
De Goey admits that he is almost uniquely sensitive to issues of free expression and control, given his role as both a consumer advocate and an advisor. He accepts that many advisors won’t necessarily care as much about statements made by corporate head offices, and many will actually enjoy the support that comes with a firm stating its outlooks. He believes, though, that advisors who are seeking what he terms “true independence” may take lessons from his recent move.
“If you’re an advisor at a firm that purports to be independent and you are feeling constrained by the products you can offer, the services you can offer, or the perspectives you can take, you should look for a firm that maximizes your flexibility on all those counts,” De Goey says. “I have spent my career searching for a firm that offers true independence… I have finally, I believe, found that with Designed.”
