TORONTO, Jan. 11, 2017 /CNW/ - Advocis, the Financial Advisors Association of Canada, is raising serious concerns that regulatory reforms being contemplated by the Canadian Securities Administrators (CSA) would erode access to financial advice for millions of Canadians.
Yesterday, the CSA launched a public consultation to consider eliminating embedded mutual fund commissions and forcing investors to pay upfront for financial advice. If adopted, these changes could have devastating implications spurred by higher costs for the industry and investors.
"This direction is fundamentally flawed. It would put financial advice out of reach for middle-income Canadians at a time when they need it more than ever," said Advocis President Greg Pollock. "We should be pursuing policies to expand access to sound and trustworthy advice, not diminish it. To understand the risks, regulators need only look to other jurisdictions that have experimented with this failed policy."
When advisory fees were unbundled from financial products in Britain, that country's major banks were driven to cancel their financial advisory services for clients without significant funds to invest, the proportion of retail investment products sold without advice significantly increased, and the number of financial advisors fell by approximately 25 per cent. Based on Britain's experience, a recent study from the University of Calgary's School of Public Policy concluded that eliminating commissions would threaten the retirement savings of many Canadians, noting that Canadians who stop working with a financial advisor accumulate 45 per cent less wealth than those who continue to receive advice.
"Tinkering with how advisors are compensated will do little to protect the best interests of investors. In fact, it could put the financial security of vulnerable Canadians in jeopardy," explained Pollock. "Instead we should be focused on setting new professional standards that ensure all Canadians – regardless of their income or where they live – have access to the trustworthy financial advice they need to secure their futures."
In its formal submission to the CSA, Advocis will argue for the creation of a legally-recognized profession for all Canadian financial advisors as an alternative to the proposed reforms. The association has also launched an awareness campaign and website (www.financialadviceforall.com) to engage its more than 12,000 members and the public to share their views with decision makers on this important issue.
Advocis, The Financial Advisors Association of Canada, is the association of choice for financial advisors and planners. With more than 11,000 members in 40 chapters across the country, Advocis is the definitive voice of the profession, advocating for professionalism and consumer protection. Advocis works with decision-makers and the public, stressing the value of financial advice and working toward an environment in which all Canadians have access to the advice they need. Follow us on Twitter @advocis or visit www.advocis.ca.
SOURCE Advocis, The Financial Advisors Association of Canada
For further information: Darlene Francis, Director, Corporate Communications and Marketing, 416-342-9896, DFrancis@advocis.ca