Presentation to the Expert Committee To Consider Financial Advisory And Financial Planning Policy Alternatives on Behalf of SIPA

Please note the following small presentation I provided with respect to the above on behalf of the Small Investor Protection Association on 3 May in Toronto.


The Small Investor Protection Association fully supports recognising the importance of professionalism in financial planning. 

Financial planning is an important component of a wealth management universe focused on the processes and frameworks that underpin the efficient planning, construction and management of personal financial assets and their liabilities over time.  

Wealth management is a complex area and those firms and individuals providing advice within it have considerable discretion over the processes that plan, structure, manage, educate and communicate.  We believe that this discretion, the complexity of the processes and the asymmetry of knowledge and experience place the professional advisor and the firm in a position of great responsibility.  SIPA believes that this places fiduciary duties, accountabilities and responsibilities on advisors for the processes that plan, structure, manage and communicate outcomes irrespective of whether the service’s nomenclature is discretionary or advisory and irrespective of title.   

Existing regulation, at the advisory level, needs to widen its remit to those services’ processes that underpin wealth management outcomes and away from a predisposition with the transaction.

It fully supports raising the standards and the integrity of service processes involved in the planning the construction and management of financial needs service processes while deemphasising the role of the transaction in process, regulation and remuneration.

The problems we see in the delivery, quality and accountability of service outcomes lie with a system that rewards the transaction and that overly focuses on the transaction in its service processes.  The focus on the transaction de-emphasises the importance of construction, planning and management in advice based service processes and constrains the development of services that put the client’s best interests first and foremost in the process.  The current system does not operate wholly in the best interests of the investor, whether this is at the advisor, firm or regulatory level.  

As the CFA institute and the Canadian Advocacy Council for Canadian CFA Institute Societies both point out, “the current regulatory scheme is incomplete”. 

SIPA is concerned over the division amongst Canadian regulators as to the merits of introducing best interest standards and the removal of commissions.  It is also concerned that even the proposed statutory best interest standard may itself be diminished by industry interests and calls on Canada’s democratically elected legislatures to become directly involved in the modernisation of Canada’s regulatory system. It believes that advisors’ responsibilities and duties with respect to advice, processes and communications are indeed fiduciary ones. 

And from SIPA’s own submission on the subject:

“This illusion fed to the general public is unfair. It results in many personal tragedies when hard working people lose their lifetime savings quite often late in life when they do not have the time to recover. It creates desperate life-altering events that result in health issues, loss of hope and faith, disruption of families and sometimes victims taking their own life.”

We live in a trusting society. Canadians believe they can trust professionals that are regulated like doctors, lawyers and other professionals. Yes, they trust their “Financial Advisors” because they believe they are regulated professionals. They are not aware they are simply sales persons without responsibility to look after clients’ best interests; they do not feel a need to study medicine or a need to study finance and investments. They are busy with careers and family.

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