Leaders lead and set standards and examples. Yet, with the Canadian mutual fund point of sale document we have, inter alia, a) something which has been allowed to be sent after the transaction and b) something in which information critical to making informed decisions has been taken out of the frame or dumbed down so as to be worthless.
Now, to me, if I want to sell and I am not entirely ethical about how I do this, I may take the regulators’ example as a green light to omitting further items from my other communication that may stand in the way of a transaction recommendation.
Indeed, if we assume a benchmark is not important, then neither are costs nor the effectiveness of an investment in its ability to achieve an intended goal. All of a sudden you no longer need to drive in a straight line because the highway has been opened up.
Now, when I see regulators toying with the commoditized version of behavioural economics, I have to ask myself, “who is being played here, just who is being “behavioured with?”. Are the regulators being nudged?
The only thing that would change my perception would be if best interests standards are about to be brought into the arena, because this would put critical information missing from the POS back into the loop. And this is the dilemma is it not? Because if best interest standards were to be brought into the loop I am sure we would be hearing much more about it. To date the industry has been much more concerned with embedded commissions.
So I do wonder…………………………..