By Greg Pollock, Advocis
Special to the Financial Independence Hub
Over the years I have had the opportunity to have many meaningful conversations with members of Advocis across the country. They often tell me about the positive relationships they have with their clients and about the difference they are making in their clients’ lives.
As the president and CEO of a voluntary professional association of financial advisors, I take my role to heart and recognize that the work our members do plays an important part in helping millions of Canadians be financially prepared and protected. But I’ve often wondered if others, whether they be government, regulators, media, or the general population, truly understand the value of professional financial advice.
Do media, government, regulators and the public understand true value of advice?
This is part of the reason Advocis decided to conduct a national survey earlier this year to examine the level of value investors place on the advice they receive from their financial advisor and how satisfied they are with the services they receive and the fees they pay. More than 1,500 Canadian investors, whose financial advisors are Advocis members, participated in the study.
At Advocis, we have long proclaimed the value of advice and its impact on people’s lives. But we decided it was time that we formally heard from our members’ clients. The financial advice industry is currently at a crossroads, and two expert panels are set to present their recommendations on the regulation of financial advice in Ontario in the coming months.
Banning trailer commissions could lower access to advice
If proposed changes such as a ban on commissions are implemented, then we will likely see a sharp decline in access to financial advice. And that would certainly be an unfortunate and unintended consequence, because I believe that industry associations, investor advocates, government and regulators alike have the same goal: to protect consumers.
When we received our study results, we weren’t surprised to find that Canadians who work with an advisor value the relationship. In fact, 96 per cent of respondents stated they believe the advice they receive is valuable. Additionally, 93% indicated they trust the advice provided by their advisor, and 88% agreed that they would not be where they are today without the advice they had received.
Perhaps one of the most interesting findings is that when investors were asked if they would prefer that the government leave the choice to them whether they pay an hourly fee, an embedded fee, or a percentage of their Assets Under Management, 88% responded “yes.” It’s clear that Canadians don’t want the relationship they have with their advisor disrupted.
Advocis members favour self regulation model
Advocis and its members are committed to investor protection and raising professional standards. That’s why we’ve proposed a self-regulation model that will not only increase consumer protection but will reduce red tape for advisors.
I invite you to take a look at our full study, Investor Insights on the Financial Advice Industry, at: www.advocis.ca/pdf/Consumer-Voice-2015.pdf
Greg Pollock is the president and CEO of Advocis, The Financial Advisors Association of Canada. Greg was appointed to the federal government’s Task Force on Financial Literacy in 2009, and he is a sought-after speaker on industry issues, both to national and international audiences.