Peter Carron advised 11 clients to invest a total of £2.4m into three companies of which he was director and majority shareholder, without adequately disclosing his interests to them.
All three of the companies later went into liquidation, costing investors £2.2m.
St James’s Place, where Carron was previously a senior partner, compensated the investors with £1.9m.
Upon issuing his fine, the Financial Conduct Authority said Carron lacked “honesty and integrity”, and banned him from performing “any function related to regulated activities in financial services“ for 13 years.
It said he “misled clients about the likely performance of their investments, by guaranteeing a return or providing inappropriate financial projections of future returns”.
It also said he misled clients to believe that the investments were approved or endorsed by St James’s Place and advised clients to invest without assessing whether the investments were suitable for their needs.
The regulator has not criticised St James’s Place in relation to the case.
Director of enforcement and financial crime, Tracey McDermott, said: “People go to advisers because they want expert help on how to make the most of their money.
“They are entitled to expect that their adviser will act in their best interests, not his or hers.”
She added that advisers “should think very carefully”, and make clear and full disclosures if they are intending to advise clients to invest in ventures in which they have a vested interest.
Last month, the FCA fined and banned an IFA after he sold unregulated funds to retail investors.
Craid Cameron, a former director at advisory company Burlington, was fined £350,000 for lacking “honesty and integrity in relation to the promotion of three unregulated collective investment schemes”.
