Most read: Big bang on CRM 2 yet to come

Most read: Big bang on CRM 2 yet to come

Most read: Big bang on CRM 2 yet to come   Financial advisors in Canada are working through the latest round of changes to customer relationship management regulations, the so-called CRM2 regs. The most recent shifts were implemented on July 15th. Many firms are now beginning to look ahead to the next round of changes, due next year and the year following.

One well-known and outspoken advisor, John DeGoey, a vice-president and associate portfolio manager at Burgeonvest Bick Securities Limited, suggests the biggest changes will arrive in the coming rounds of regulatory shift and and change.  "I think the changes are going to be earth shattering in two years. Next year and the year after will be the big bang," said DeGoey in a recent interview with WP. 

Many have worried that the ongoing shift toward transparency of compensation will create a situation similar to what occurred in the UK when regulatory changes to compensation structures there saw 25% of the advisor force leave the industry. Some worry a similar situation is looming in Canada. Once clients see what they are being charged, many will switch advisors, or begin investing themselves. So far, there has been no such dramatic restructuring yet. But the deepest shifts are yet to occur. "The regulators are giving advisor lots of runway. But this is really going to change the industry," says DeGoey.

Some warn that in the UK and Australia the vast middle-class has left without access to advisors as those left in the industry focus only on high-net worth individuals. But DeGoey pushes back against the disaster chatter.  He thinks that what happened in the UK was a good thing. "There was some blood on the street in the UK. But the UK industry didn't collapse. The real, overall effect of the changes there have been to raise the bar on proficiency," he says. According to DeGoey, revealing embedded compensation chased advisors who were not proficient out of the industry, a positive occurrence. He takes issue with the suggests that 25% of the advisor force that left the industry in the UK. The real story he says is that many advisors went back to school, polished up their skills, and have since come back into the industry. "When you get rid of embedded compensation, two things happen. The customers learn what they are really being wcharged. Those who are not proficient are chased out of the industry," says DeGoey. "But in the UK many came back, almost half in fact. And so the real story is that there has only been a net loss of 10-15% of the advisor force." The deeper, positive effect "was that the overall proficiency of the industry went up."

DeGoey's message for advisors trying to negotiate the coming shifts--get trained and up to speed in terms of skills as fast as possible. Don't sit around and indulge in doomish prognosticating. Make sure you are a survivor. "Some have been trying to scare the regulators into thinking the sky is going to fall if they do this. But those are just scare tactics. The sky didn't fall. The overall effect was to raise the overall level of proficiency," he says. "You're an idiot if you don't get up to speed in terms of proficiency. The regulators are giving you a lot of time to get this done." 
3 Comments
  • Kevin O'Brien 2014-07-31 11:54:45 AM
    Am I correct in my conclusion that after reading this article - DeGoey is proclaiming himself as being the most proficient advisor in the industry? And that his proficiency is due to the fact that he is fee based? What about the rest of us that have a significant portion of our AUM on a fee based platform and charge a fee for financial planning and providing advice?
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  • Brad jardine 2014-07-31 1:13:50 PM
    Amen Kevin, getting tired of lazy journalism trotting out this guy on a regular basis. He must spend more time writing and appearing instead of servicing his clients.
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  • Kathy Waite 2014-07-31 9:39:13 PM
    Clients see the total amount they pay , I went through this in the UK 13 years ago and the skill as an advisor was explaining what I actually got , overhead , support staff , insurance , software etc. Most clients realise you have to make a profit to be in business or you wont be there to look after them in the future they are planning for anyway. There were very large sales forces of people who were par time. I was a sales manager for a time and on my team had a semi pro golfer and a semi pro classical guitarist. Great salespeople based on networking but low level of knowledge. Those guys are gone , the standard has gone up. I see old colleagues on linkedin they are at independent boutique forms or large banks not Prudential/ Liver Pool Victoria / United Friendly ( read F55 / IG Priamerica ) . Don't all industries change?
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