Where would all the freed slaves go?

For those who do not know, Canada’s financial services regulators are deciding, in a round about way, as to whether to grant investors the freedom to decide what price they wish to pay for financial advice and what services they wish to pay for. 

That is, should payment be subject to an agreement between the advisor and the client about service and the price of that service, or should it be solely dependent on the execution of a transaction and an agreement between the product provider and the dealer/broker? 

Severing the compensation from the transaction is an emancipation of a kind, not as grand or as important as votes for women and the fight for the same rights for citizens of African descent, but an emancipation no less. 

The current owners of this particular sausage factory, the investment dealers and brokers and product providers, and their in tow legal counsel, want to keep things as they are. 

Freedom and choice, it would seem, according to those who argue against emancipation, will prevent many from being able to access financial advice, put others out of work, and of course the system works well as it is.   Why change?  Why indeed?

I am sure that when slavery was being considered for abolition many might have clamoured “what would happen to the slaves on their release, where would they live etc?”, for this is the same argument many are now using with regard to the smaller investor.

The Advocis submission (and the rest of the crew) pointedly states that smaller investors would no longer be able to access advice, that the costs of said advice would rise and many would be turned away.  No doubt,  the costs of feeding and housing a slave (costs that had little regard for their long term welfare) were far lower than the costs for a free man.

BUT, why does the cost of servicing a small investor under a commission basis pale against the cost of a fee based service?   How can one offer advice for dollars and cents on a very small number of dollars, one minute, and then turn around and charge hundreds if not thousands of dollars, on the same, the next?

Is it not the truth that smaller investors are not truly well served under the current system and that we need to develop more efficient, more cost effective ways of bringing smaller investor capital to the capital markets?  At the moment the system’s intent is to serve no one but itself.   Moving to a fee basis will only highlight the real plight of advisory services for all, and in particular the smaller investor. 

Tying remuneration to transactions and keeping decision and choice out of the arms of the investor (but perversely keeping the responsibility square in his or her court) is perverse, a gross conflict of interest and an abuse of human rights on a systematic and national scale. 

For access to industry and other submissions:


And, before I sign off, I would also like to point out that whereas in the submissions on best interests the industry claimed how advisors were merely sounding boards, but when it comes to transaction initiated remuneration and the current submission, they point out the importance of their advice.    

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