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Wealth Professional | 27 Mar 2017, 08:15 AM Agree 0
The CSA’s proposed ban on embedded commissions is a hot topic of debate. Here, Greg Pollock from Advocis gives his response to recent comments
  • Ross B. | 27 Mar 2017, 10:15 AM Agree 0
    The title of this article is "Advocis responds to portfolio manager's criticism". While there was a response, it would have been more credible had Mr. De Goey's direct questions been answered and his criticisms been directly addressed.
  • Kathy | 27 Mar 2017, 11:26 AM Agree 0
    Pollock contradicts himself. He wants the profession to be like lawyers and accountants, well last time I looked I pay those people based on the amount of work they do not commissions.

    I think he also underestimates how young people with degrees want to be paid for what they know not what they sell. The word commissions is still too associated with sales tactics rather than advice. The industry struggles to recruit and with retention.

    The whole argument seems to be about asking people to pay directly for their advice making it unaffordable. Don’t most fee based advisors just use a class of funds with no trailer and then have a fee agreement? It still comes out of the account each month but is clearly split out and visible.

    Here in lies the objection I think if someone sees the fees they may actually ask for some value in return. Instead of the years of skimming off fees and no one noticing then advisors will have to step up justify cost and show they added value.

    Should most people with under $50,000 be investing in these things anyway? They don’t have sufficient emergency funds or disability plans to replace income. (yes I have a 30 year old with full DB pension , no debt , emergency fund , great disability plan and sick days , has $40k she does invest it long term but that’s not the norm )

    $75,000 ? Currently paying $1900 in an average mutual fund. An advisor could put someone in 3 index funds at 0.25% and charge $50 a month and that’s still $300 an hour for the 2 hours a year they spend with the client to rebalance and advise. (I am completely aware of the overhead advisors have.)

    Get modern, webcam with your clients, do more education making videos for them etc. At that level there is no stock selection going on , its their dealers own brand balanced fund. Families need to learn good financial behaviour and have someone to ask when they have a life change. Maybe a phone call or webcam one year and a face to face the next year. Start thinking about what help your clients really want not lamenting the loss of an unquestioned income stream.

    And yes…….I lived through polarisation in the UK in my 30’s . We had to disclose not just costs but the impact of fees over the years on insurance and investments. We showed two future figures, with no fees, with fees, people are not stupid they don’t think you work for free. I didn’t have a single client say they wouldn’t do something because of it. I do agree with Pollock on learn from it though and find a middle ground.
  • Robert B. | 28 Mar 2017, 09:01 AM Agree 0
    KATHY STATES "$300 an hour for the 2 hours a year they spend with the client to rebalance and advise."
    Frankly, if that's all you do for a client in a year, you shouldn't be making $300 per hour. Financial planning and working with clients to improve long term outcomes requires significantly more time spent. And with younger clients starting out, the choice of paying an upfront fee vs. a commission is the difference between having access to proper, effective advice vs. doing it yourself. And every study ever conducted shows that investors with advice outperform those without.
  • John De Goey | 29 Mar 2017, 10:25 AM Agree 0
    Every answer is a response, but not every response is an answer. I asked 8 questions and received exactly zero answers. My sense is that the folks at Advocis are unaccountable for what they say. Repeating a corporate line without substantiating it is no way to persuade thoughtful people.
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