Advisors, are you free to offer the best solutions?

Advisors, are you free to offer the best solutions?

Advisors, are you free to offer the best solutions? It’s been a trying month for the Canadian financial services industry. First came the news that employees at the big banks felt pressured to break the law in order to meet sales targets and then, last week, CBC published a story about an investor who felt ‘duped’ by an RBC advisor. With unfavourable stories seeming to hit the news with increased regularity, Canada’s advisory community has been forced further into the spotlight.

For Grant White, an Investment Advisor at National Bank Financial, the recent CBC story didn’t come as a surprise. In fact, he believes such a story was overdue. “There’s been more awareness of how the industry works over the last couple of years; it’s a hot topic,” White says. “People are looking at things more closely and if advisors aren’t doing the right things for their clients, then I can see how something like this can come out.”

Although he’s never felt pressured to mislead a client, White has talked to others in the industry who have felt pressured to use products from their own institution even if they're not the best possible solution. White has noticed this sort of activity occurring more at the branch level rather in the wealth management teams. “People need to be aware that the banks are businesses and that their goal is to sell their own products. I don’t necessarily think the banks have done anything wrong from that standpoint,” White says. “At the same time, advisors need to be free to recommend solutions that are in the best interests of their clients not the bank they work for. They need to have the autonomy to use products from various institutions.”

White believes that some of the issues are created by a lack of consumer awareness and thinks that personal finances should play a more significant role in school curriculums. If a client makes an invesment decision they don’t truly understand, it's unlikely that they're going to be completely happy with the results, which may not be the fault of the advisor. “That’s where people can get really hurt; when they use the wrong types of solutions,” White says. “Education around personal finances can alleviate a lot of these issues and help mould the banks into institutions that act in the best interests of clients.”


Related stories:
Are sales targets damaging client-advisor relationships?
Ombudsman speaks out on TD Bank allegations
 
2 Comments
  • Wealth Advisor 2017-04-06 9:28:14 AM
    No need to reinvent the wheel here. One only has to look to the U.S. for examples of how financial institution that sell proprietary products have to work in a fiduciary "best interest" environment.
    The obvious answer is that they don't. They are exempt.
    Therefore here in Canada, no one expects RBC to sell BMO GIC certificates if the rate is 0.1% higher.
    Best interest to sell the best products is a marvellous idea -until the lawyers get hold of it.
    Post a reply
  • 2017-04-08 2:28:40 PM
    There is no such a thing as a fiduciary. not in the United States, not anywhere. There are good advisors and bad ones both the word Fudiciary
    Is nonsense. Even the few people that say they are a Fiduciary are no better or worse then a person that is a non Fiduciary.
    The people that are Fiduciaries, so called, they are doing what's best for the client in their own mind but that doesn't mean
    It's in the clients mind.
    Post a reply