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Wealth Professional | 18 May 2016, 08:30 AM Agree 0
Leading Canadian financial advisor has his say on why it’s right to shake-up the status quo
  • Jack D. | 18 May 2016, 10:33 AM Agree 0
    Hi John, I am sorry to report that the Cummings Report, which I read cover to cover as part of my Committee work with Advocis, was quite a bit more ambiguous in its conclusions about conflicted advice than you are asserting in your comments. Let's call this what it is, it is a political Agenda to force change in how the industry and more specifically the public accesses advice. The experience in other jurisdictions clearly shows that advice for average people has become harder to get since similar reforms were implemented in, for example, Australia and the UK.

    I support having multiple compensation models available from which consumers can choose as best fits their situation.

    You have been beating this drum for years and I suppose it works for you as a marketing differentiator.

    Respectfully, Jack Di Nardo, CFP.
  • Peter | 18 May 2016, 10:39 AM Agree 0
    Why is the focus always on advisor's commissions and trailers? A good advisor is worth every penny he/she earns.
    Why not focus on the ridiculously high MERs that companies charge the investors?
    "Over the long term, over 80% of active managers underperformed their benchmark index" ... Globe and Mail – April 16, 2015 – “How Canadian Fund Managers Performed vs. the Index in 2014”
    Whether an advisor is paid via bonuses, commissions, salary, and/or trailers, it all comes down to honesty and integrity.
    I have been in the industry long enough (a few decades) to see the greed and corruption that goes on on Bay Street and Wall Street. So please, stop always blaming the advisor for faults of an entire industry!
  • Mark | 18 May 2016, 11:22 AM Agree 0
    If you are talking about conflicted advice why not look at such things as this January 18th 2016 offer to "Get more sales credits and increase your chances of qualifying for Conference 2017 with iA Financial Group’s new EquiBuild insurance"

    I believe there is a place for trailers, for DSC, for fee-only service and for the client to choose with their financial planner how best to compensate him/her for their work. If there is full disclosure, there is no conflict but where there is a potential for conflict is when companies run promotions for their products, no matter how good they are, which raises the suspicion that the product was placed for the client because of some incentive like a trip to a conference or some other "reward".
  • Howard Kitchen CFP | 18 May 2016, 11:29 AM Agree 0
    I concur with Peter's comments. The way a person gets paid has nothing to do with giving good solid advice. Mr. De Goey is way off base lumping all advisors together. The method of pay makes no difference to the poor advisor or dishonest advisor. I can prove this! The legal profession has a fee for service and I can't remember all the times people have told me they have changed lawyers after $10's of thousands of fees. This happens all the time. Again it would be foolosih to say all lawyers do this. Obviously most of them give great advice and earn their fees. By the way I think the seasoned lawyers have pretty good incomes. Bottom line I will continue to give the same great service however I get paid and make a great living. Mr De Goey should look into the pros and cons of all fee structures honestly and like he promotes, unbiased!
  • Richy Middleton | 18 May 2016, 12:29 PM Agree 0
    I couldn't disagree more, embedded trailers is the low to moderate wealth clients' only chance of putting themselves in front of a financial advisor.
    Is the postman going to pay $300 an hour for advice to set up a $200 a month PAC into a mutual fund!!
    Laughable!!
    you'll see that embedded commissions are clearly the best option for the client, time will show the negative effect that Australia and the UK experience.
    Less clients will seek advice.
    Less advisors will enter the industry.
    One thing i would look at is chargebacks on a dsc if the client moves the money before 7 years.
    Once again the advisor's trailer share is being attacked, why not attack the dealer's share or the IMF Fee?!
  • Debbie | 18 May 2016, 12:38 PM Agree 0
    John's views are bang on. Enough rhetoric and hypocritical client choice crap!
    Rob Carrick states "Trailing commissions are one of the biggest contributors to financial illiteracy because they lead people to believe that financial advice is free. Advice is not free, nor should it be. In hiding the cost, the fund industry and its adviser sales force prevent us from having a financially literate conversation about how much advice should cost, and what advisory fees should buy you in terms of service and financial planning."
    Tom Bradley points out and confirms what John is saying above "To the extent that some Britons are no longer using an advisor, it may be that they became disgusted with the industry (once they learned how much they had been paying all along)." 'Our financial adviser is such a nice man. Every year he takes us out for a wonderful dinner. I wish we could pay him in some way.' This is an exact quote from a friend’s mother. It’s a classic example of a Canadian investor not knowing what he or she is paying."
    Commission tainted advice needs to be done away with.
    Here is the real fear of the phony client choice advocates laid bare "Choosing to forego advice is a far cry from not being able to get it." They fear many will decide to just forgo the advice they have been getting. Once people see the cost of that advice plainly and the "value" they have received for it, if they don't add up nicely you're damn right people will move on. If you have been giving value for your advice then what are you so afraid of?
  • Richy Middleton | 18 May 2016, 12:59 PM Agree 0
    Debbie- Tom Bradley runs a fund company with a 1-800 call centre, advisors on the end of the phone. Based on my discussions with him on forums i interpret that he wants his clients to buy his funds direct from source (wholesale) avoiding and circumventing the 100,000 advisors we have on the ground out there prospecting. Fair enough, it's a good book
    of funds and good luck i say to him that's a good fit for some/ many but a poor fit for some/ many.
    We need his wholesale options (i'm being charitable here) and existing other options such as embedded trailers with and advisor who writes a plan.
    Call centre advisors is in my opinion not the best way to build wealth. One day you speak to Kev, next day Shirley, next day Steve.
    Is a call centre advisor going to write you a financial plan?
    Tom Bradley himself said to me 'anyways most financial plans don't work', so there is an indication of the direction of these new wholesale 1-800 fund companies.
    Pick whichever you like, Tom may have lower trailers, but the sacrifice is the written plan. Take your pick.
  • Jack D. | 18 May 2016, 01:11 PM Agree 0
    Thanks Debbie. I am all for disclosure and providing value for the fees earned. But the dark side of what the Regulators are proposing is fitting all consumers into one compensation model which may make it more difficult for those who want to access advice to do so.

    The political goal of the Ontario Government, as publically stated, is to reduce the compensation across the entire industry. How they do that is the only issue that remains to be seen.

    If society decides that our industry does not provide enough value, just like black smiths, then we will have to find other productive outlets for our talents.

    I am most concerned about how new advisors can enter and survive in our industry as the needs of the public that we serve are greater now that when I entered the industry 27 years ago.
  • Peter | 18 May 2016, 02:02 PM Agree 0
    Debbie, I am glad to see that you think Rob Carrick is the guru of Canadian financial planning when he has no accountability or responsibility to anyone! Perhaps he should try to become an advisor himself.
    Not to knock Rob, he does write some excellent articles.
    I for one am sick and tired of all these "financial literacy" advocates. I have spent over 3 decades in this business constantly learning and studying the best practices, investments and products for my clients' individual and specific needs. They rely on me to give them expert advice and to simply a complicated process or product.
    Does your doctor offer you medical literacy?
    Does your dentist offer you dental literacy?
    Does your lawyer offer you legal literacy?
    You pay these professionals a handsome fee for their years of studies and expertise.
    If people want to be financially literate I will guide them to hundreds of good articles, books and websites. My experience tells me that most clients are not interested in becoming "financially literate", other than knowing the basics and they want a knowledgeable and trustworthy advisor who is looking after the clients' best interests first and foremost and to guide them through the financial maze.
    I am my clients' financial doctor!
    As with any profession or trade, there are some excellent individuals and there are some who should be expelled from their field.
    If I am doing an exceptional job for my clients, and I have over 100 unsolicited testimonials, why should I not expect to compensated in an equitable manner?
  • Brad Jardine CFP, CLU, CHfC | 19 May 2016, 10:11 AM Agree 0
    Some advisors who are oft media quoted charge much more for their clients on a fee for service basis than most trailer fees would ever pay. I suppose more trailer fee transparency or elimination would be ironically be a disservice to them from a competitive basis. Look it up and be careful what you wish for...
  • Debbie | 19 May 2016, 11:43 AM Agree 0
    I am not saying Tom Bradley or Rob Carrick are financial guru's I was quoting them directly and needed to site my source.(for some reason the links I provided did not show up) Neither am I saying, nor is Mr. De Goey saying financial advisors should not be paid. I would encourage some of you to re-read both the article and my specific comments again. The Tom Bradley quote was highlighting the fact that Canadian consumers do not understand and in many cases even know the fees they are paying. Mr DeGoey is pointing out that there is no credible reason for this to be the case since trailers have been around for nearly 30 years of trailers. I agree with his stance that CRM 2 is not going to do the trick either and to get rid of embedded commissions. Mr De Goey states "If embedded compensation was to be banned and advisors were free to charge separately for their advice, access to (cost of) advice should be virtually unaffected." One is hidden and one is plain. So Jack why would that make it "more difficult for those who want to access advice to do so"? I agree totally with you that "the needs of the public that we serve are greater now that when I entered the industry 27 years ago." Which is why conflicted advice needs to end, professional standards raised and a statutory best interest be put in place so a client's interest is legally front and center. Peter the financial industry cannot compare itself to doctors, dentists and lawyers unless they have the requisite training and skill and the inherent responsibility of being held to a fiduciary standard. Thankfully doctors are not compensated by the pharmaceutical industry! Which reinforces that if this industry wants professional status they too should not be funded by products they are selling. You can't have it both ways. You are either a salesman or you're a professional. This industry wants all the perks of being salesmen while posing as a professional without the statutory legal requirements of every other true profession. The gig is hopefully soon to be over. Again I repeat if you have been giving value for your advice then what are you so afraid of?
  • Brian Shumak, B.Sc., CLU, CFP, TEP | 19 May 2016, 12:10 PM Agree 0
    I find it farcical that there needs to be a discussion on how an advisor is paid rather than a discussion on how to address those advisors who conduct their business in an unethical manner.

    If there is a conflict of interest in commissions of any sort, then I am confident that a conflict of interest can be had when paying a fee-for-advice as well.

    At the end of the day, there are many advisors who are ethical and discuss the options thoroughly with their clients and continually work in the best interest of the client independent of their own pocketbook.

    If there was a way to 'police' the unethical in the financial world, that would be a great solution. In the interim, why is it that there is a movement to penalize all when there are only a few who are unethical and will not listen to any rules anyway.
  • Ken | 19 May 2016, 04:50 PM Agree 0
    Everyone is entitled to an opinion but no one is entitled to dream up facts.There is no question that embedded trailer commissions and the sales quotas and commission grids are related to sales volume production. When I see brokerage firms reward their staff on client satisfaction, support the Best interests standard for advice giving and treat complaints fairly that is when I will start listening to Bay Street. The current compensation system is destroying the ethics of well intentioned advisors. There is a reason surveys show used car salespersons are more trusted than fund salespersons. The root cause is management, focussed on quarterly earnings and stock options.An old Arabic expression says" A rotten fish stinks from the head" . We need to stop picking on advisors and look at the root cause that lurks in the shadows- management.
  • Jack D. | 20 May 2016, 11:18 AM Agree 0
    Hi Ken, your points about performance pressures from big companies are exactly why I am an independent who has no sales quotas and is not accountable to anyone for revenue or profitability levels.
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