Wealth Professional forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Notify me of new replies via email
Wealth Professional | 11 Jan 2017, 08:15 AM Agree 0
Regulator group’s request for comment may signal the end for embedded commissions
  • Tony Battista | 11 Jan 2017, 02:05 PM Agree 0
    Those who want to remove embedded fees are wrong and do not understand a large part of the industry. they should concentrate on standardizing fees and commissions for each class of funds. By eliminating embedded fees the small clients,the beginners, the young clientele will be hurt the most. Do not forget that the work of the financial advisor goes beyond the sale of the mutual funds.
  • Paula MacMillan | 11 Jan 2017, 03:51 PM Agree 0
    Agreed. There is a VALUE to advice and it has been PROVEN in the UK (for example) that this did the average Brit citizen no favours and forced 30% of advisors out of the business. There have been admissions from regulators in the UK that maybe they went too far. Investing is tricky business and when left to MOST individual investors to do on their own - disastrous. I have had three new clients in my office since the beginning of 2017(!) who have been doing it on their own and have 'had enough' and 'don't like the pressure' of knowing too little or making the 'wrong choice at the wrong time' not to mention the fear of an investment decision costing them tax wise. I urge regulators to listen to CDNs and ask them what they want - do it on your own or pay an advisor? I have explained how my company/dealer and my own corporation are compensated to clients for year. I think that the answer to the issue is more education of consumers, not less advice. Every client (EVERY ONE) whom we have shown how we are compensated asks the same two things: "that's it?" and "why did my other advisor never explain this to me?"
  • | 12 Jan 2017, 10:59 AM Agree 0
    It seems that regulation has gone too far and is causing real financial damage to many average people.
    It has put most small mutual fund dealers out of business and it is aiming on advisors that target average people out of business as well.
    What they say is much like Canadian policy in general, where Big Brother tries to protect the very few, Darwin award candidates from themselves.
    Government intervention is generally bad news. Regulations are government intervention.
    I don't see how raising "compliance costs" through the roof, putting so many people out of their jobs and eliminating options for average, middle class people is on the right path. It as though the people inventing these rules have a single focus, a single lens and refuse to see the bigger picture or alternatives.
    Their next job will be to work against the monopoly and oligopoly business structures that will result.
    I am fortunate enough that my business is relatively stable and I expect to change my trailers to fees. Smaller clients will receive less service. I may have to transition out of funds and move to a fee based service, but I think I have a bit of time.

    I think that the majority of good advisors will change careers to ones where compensation is in line with education requirements. The overall level of advice is likely to decline.

    Regulators don't seem to know about basic economics of supply and demand! Maybe because it is not measured or because it is part of the big picture, but they seem to be missing it. If they force up costs and eliminate income, then supply is reduced. There cannot be perfect competition because they have installed very high barriers to entry.

    I hope they don't regulate us out of business. It will cause big hurt to everyone.
  • | 12 Jan 2017, 01:17 PM Agree 0
    It's very simple. If a client wants embedded commission, let them have embedded commission.
    If a client wants fee for service let them do that. Remember, it's not the regulators money and it's not the advisors money. It's the clients money. Why are we even discussing this.
    How does a regulator know what my clients or any other clients want. They don't.
    When I ask my clients what they want most say they like the way it is, meaning embedded fees.
    I show the fee for service model and most still want embedded commission.
Post a reply