The ballooning number of mutual funds on the Canadian market are little more than a tool to convince investors to hire commission-based advisors, says one fee-only player, arguing financial advisors are themselves victims to that system.
Loaded with complicated terminology, the 15,000 or so funds available across North America are set up intentionally to confuse investors, so they reach out to a wealth management professionals for advice, says Mike Bayer of Strategic Analysis Capital Management Inc. in Mississauga.
“The confusing terminology is to intimidate people,” he explains. “It convinces them (investors) that they can’t manage or control their investment portfolio. A lot of that is done on purpose.”
Ironically, the status quo also hurts advisors wedded to the traditional model, says Bayer, offering the same sort of analysis of a growing number of industry vets.
“I feel for advisors, I really do. There is a lot of cognitive dissonance. They know they are not doing the best thing for their clients, but they’re locked into this system,” he says. “A lot of advisors want to do the right thing, but they can’t because they’ll get fired.” (continued on Page 2.)