Canadian Securities Commission - Discontinuing Embedded Commissions - A MUST READ!
Happy New Year to all Calgary Advocis members! While I have hope for a Prosperous New Year for you and your clients, there is a very real threat on the horizon.
The Canadian Securities Administrators (CSA) just released their paper Tuesday on Discontinuing Embedded Commissions. It doesn't look good for 'Main Street Albertans' (the majority of our clients). Vulnerable Albertans may lose access to affordable, professional financial advice, and all investors could be forced to pay upfront fees of $100 to $300 per hour. Proposed changes mean financial advisors may not be able to keep their costs the same and potentially could be forced out of business. It is not only wealthy Canadians who should have access and choice. All Canadians – regardless of their income or where they live – should have access to trustworthy financial advice. Whether you offer Mutual Funds or Segregated Funds, discontinuing embedded commissions will have an impact on you and the clients you serve. You only need to spend a little time to view the report to understand that CSA would be in consultation with the Canadian Council of Insurance Regulators (CCIR) regarding this matter.
In 2016 Advocis members and staff talked to elected officials about the value of financial advice to Canadian consumers, raising professional standards, and current regulatory proposals currently being examined by the Canadian Securities Administrators. In particular, Alberta Advocis members delivered a strong message to our MLA’s that the banning of embedded commissions and the imposition of a regulatory best interest duty would hurt consumers by limiting access and choice to professional financial advice for most consumers.
In addition, the Canadian Securities Administrators, the umbrella group made up of all of the provincial and territorial securities commissions across Canada, is considering imposing a regulatory best interest duty (the priority of the clients interest) on advisors. Advocis made a formal submission to the CSA. Some of the provincial commissions hosted face-to-face consultations, (namely BC, Alberta, Ontario, Nova Scotia and Quebec) to hear from interested stakeholders on their proposals.
Advocis supports putting the client’s interest first. The priority of the client’s interest has been part of the Advocis Code of Professional Conduct for 50 years. However, imposing an undefined regulatory best interest duty, as opposed to creating a true profession of financial advisors to oversee professional standards, creates a legal liability standard on advisors without any regulatory representation by advisors. Simply put this is regulation without representation. Other professions do not operate in this way. A regulatory best interest duty could result in the elimination of commissions as they would be considered a strict conflict of interest, leading to less advice for Canadians. Advisors manage conflicts of interests through fee disclosure and Advocis fully supports transparency.
Advocis National has been very proactive this week since the release of the CSA paper 'Discontinuing Embedded Commissions' on January 10th 2017, and I urge you to take action.
What can you do?
You will be pleased to know that Advocis isn’t taking this sitting down. We are excited to launch a digital campaign targeted at both financial advisors and their clients. Financial Advice for All is a micro-site that outlines the issue of banning commissions and how it will affect Canadians.
Go to: http://www.financialadviceforall.com
The site features client stories that illustrate the importance of financial advice and how advisors positively impact their clients’ financial well-being. Click on ‘Advisor Portal’ to share handouts with your clients, share our message on social media, and request a meeting with your local Politician.
Need an easy way for your clients to connect with their local MLA? No problem! Click on ‘Take Action’ at the top menu of the website. There you find a template clients can use to address their concerns.
Remember: The threat to ban commissions is real. Advocis is here to support you and your clients.
Thank you for your continued support in 2017 and also to our local Sponsors.
Mike Bibby,
Advocacy Chair, Calgary Chapter
