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Anthony Layton MBA, CIM

Chairman & CEO, Portfolio Manager

Peter Guay MBA, CFA

Portfolio Manager
Contact
  • T514.875.7566 x 224
  • 1.800.875.7566
  • F514.875.9611
  • Place Alexis Nihon
  • 3400 de Maisonneuve Ouest,
    Suite 1501
  • Montreal, Quebec H3Z 3B8

Tony's Take: Industry groups resist ‘client best interest’

March 27, 2017 - 0 comments

The Canadian Securities Administrators (CSA) intends to establish a client-best-interest standard. This proposal is to outlaw embedded sales-related commissions and require advisors to use transparent direct-pay arrangements; transaction-based commissions or fees on assets under management (AUM). This has caused an uproar in the industry.

Among recent developments:

  • Response to the CSA’s initiative suggests that industry groups (large financial institutions and legacy commission-based advisors) are not looking out for clients. They argue that doing away with trailer fees from embedded mutual-fund commissions will be detrimental to investors because the advice channels currently available to them will dry up. Takeaway 1: This did not occur in the UK when they outlawed embedded-commissions in 2013.
  • Recent news reports have alleged that large financial institutions (LFI’s) have been pressuring their sales staff to strong-arm clients into investment products that are completely unsuited to their needs. These activities provide further evidence that the Canadian investment industry’s archaic system of high and often hidden fees makes it impossible for advisors working for these institutions to act in a client’s best interest. Takeaway 2: LFI’s profit margins do not serve client best interest.
  • Often confusing to investors is the clutter of competing licences professional designations (CLU, RFP, CFA, PM, CA, PFP, LLQP, CIM, PF, CFP). Regulators, licensors, and LFIs are arguing as to what products and services represent client-best-interest. Takeaway 3: Look for independent firms/advisors committed to Fiduciary care.

Ensure your advisor is qualified to deal with your situation and act in your best interest. Ask if they are licensed to sell commission-based products. It’s essential to ask the right questions.

By: Anthony Layton with 0 comments.
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