Opinion: Commission bans would harm Main Street

Opinion: Commission bans would harm Main Street

Opinion: Commission bans would harm Main Street

Without a doubt, embedded commissions facilitate smaller retail investors’ access to advice on a more efficient basis than under a fee-for-service model. For people in Canada wishing to pay separate fees-for-advice, this option is already available and growing. 

 

At the Ontario Securities Commission’s recent roundtable, where I was pleased to serve as a panelist, we were asked whether Canadian retail investors would be willing to pay for advice under a fee-for-service model. The fact is that investors are paying for advice today—but it is done in a way that is efficient and convenient for both the investor and the advisor.

The current structure allows those with small amounts of investments to access advice—which ultimately encourages savings and helps Canadians build wealth. This is a key public policy goal of our provincial and federal governments.

There is a legitimate concern that some investors are not sufficiently aware of the fees that they pay. A measured approach will afford us the opportunity to foster better understanding of the pricing structure with new disclosure requirements.

At the same time, we will have the opportunity to observe the impacts of the commission ban in the UK and Australia. The insights we gain will enable us to assess the impact of these approaches on investors, in order to determine whether better and targeted disclosure is the best way to help them understand the cost of the products they buy.   


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4 Comments
  • John Rathwell 2013-07-04 9:16:24 AM
    If the government removed the embedded commissions I would have to lay off staff and stop taking smaller accounts. My clients don't complain now about fees, and this whole issue is going to create more harm than good.
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  • Isaac 2013-07-10 10:42:40 AM
    Imbedded commissions has as much effect on the value and effectiveness of a financial advisor's advice as the dental fee guide has on getting a good filling or a bad root canal. If the regulators want to protect the public from bad advisors, raise the entry requirements to the industry, educate consumers on best practices & increase disclosures.
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  • Peter B 2013-07-23 3:49:07 PM
    Embedded commissions are deceitful and dishonest. Transparency is the hallmark of ethics and perhaps some of the so called "Advisors" who lament removal of these fees will destroy their businesses should look at transactions from a Customers' perspective; Perhaps they would actually like to be informed of the fees their "impartial" Advisor is earning... better still - negotiate those fees. The old days of hidden and under-ther-counter commissions are gone - not recently either - long gone. Those who do not evolve will be put out of the industry - and for good reason. As Regulators struggle to grasp the impact of legislative measures to control the industry, the opportunity to self-regulate is almost lost - due to the bloody-mindedness of the last Brigade....Never ind they will all drift away, replaced by a new breed of professional fee-for-service Advisors who are not afraid to rely on their skills to provide long-lasting solutions to clients.
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