Interface…? The frame of reference is hindering the debate!

I was wondering why Ellen Bessner, famed defender of the financial “advisor”, was so chirpy today when forwarding a link to the “OSC study titled “Strengthening Investor Protection in Ontario – Speaking with Ontarians” “.

Well, as soon as I came to the following, I got it, I understood:

“A financial adviser’s role is to be the interface between you and the investment world.”

I ask myself, what the hell is an interface in this context?  This to me reinforces the current transaction boundary of regulation and the antiquated view of the roles and responsibilities of investors and advisers/”ors”.  This places Canadian regulation in a different galaxy and on a different trajectory entirely to international regulators.      

Unfortunately this also has the Investor Advisory Panel stamp on it.  If the IAP thinks that an “advisor” is merely an “interface”, then there can be no fiduciary duty, no “real” best interests standard, no valid improvement in suitability standards, no removal of embedded commission etc.    

If we think in terms of systems and structures, the adviser/”advisor” is not just the interface, but the decision rules, the parameters, the disciplines and processes that lie behind the interface. 

This Investor Ed/IAP definition ignores the depth and perspective of the functionality of the process and the relationship: it is myopic, ill informed and ignorant.

The whole best interests debate is about defining the roles of “advisors” and investors within the context of advice based service processes, yet we have here a definition which overrides this debate and places it firmly back in transaction territory.  This is nonsensical.  No wonder Ellen Bessner was elated.

Does anyone really understand what they are doing here?   While the “interface” description is a woefully inadequate interpretation of the relationship, the real damage that risks emanating from this statement is the reinforcement of inappropriate regulation.

If I was the industry, I would be jumping for joy after reading this report.

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