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Wealth Professional | 23 Jan 2018, 07:55 AM Agree 0
“If we got rid of (say) the bottom 20% of the advisor population, consumers would be conspicuously better off,” says a Canadian PM
  • John Semlitch | 23 Jan 2018, 11:37 AM Agree 0
    You are assuming that the 20% of lost advisors will all be in the bottom 20%. In reality, there will be a lot of good advisors lost as well and there will still be a lot of bad advisors left.
  • | 23 Jan 2018, 11:39 AM Agree 0
    However the number of advisors has changed much more significantly in those countries that removed embedded commisions, Ie the UK and Australia, and in both those cases, advice to consumers did drop off as there were large numbers of people that could not afford the advice under a pay up front system and the banking system could not fill the gap. This issue is both about the client having access to advice and the advisors themselves. Now could you eliminate the DSC structure, yes that would work to allow more freedom of movement of accounts should the advisor be deemed not valuable. However pushing everyone to Banks is not in the public interest it is in the banks interest only.
  • JP | 23 Jan 2018, 10:54 PM Agree 0
    I think what John means is that there will be a squeeze on 20% of the advisor population that just push product. There is no real value in product pushing and robos can do it much more efficiently. The "bottom 20%" of advisors, arguably, do just that, and are therefore going to get exposed if embedded fees get banned. Any advisor worth their keep knows their value and the clients know their advisors value even more. If the client does not, you as an advisor are not doing your job right and are part of that 20%!

    With regards to the "affordablity/advice gap" in the UK and Australia, if there even is one, it provides opportunities for new businesses to come fill that gap up. IF such a thing even exists, it will not exist for long.
  • TimR | 25 Jan 2018, 02:26 AM Agree 0
    Hey John,
    Reality check time.
    The average advisor is dealing with average people.
    How does your income compare to the average Canadian?
    Stats Canada numbers are below:
    The median total income of Canadian households rose from $63,457 in 2005 to $70,336 in 2015, a 10.8% increase.
    Today, Statistics Canada is releasing data from the 2016 Census on the incomes of Canadians. This release presents incomes of Canadians as measured in 2015, and looks at trends over the 2005-to-2015 period, a decade of significant income growth and economic change.
    So, you use $100,000 as an example. Not everyone is as fortunate as you to save and invest millions.
    I have clients – Government Employees on the Sunshine List earning 100K that are retiring with savings of $100,000 after divorce, after kid’s tuition , after all that life throws at them.
    They rely on the generous pensions provided to barely get by after retirement.
    What about people with no pensions?
    Have you ever thought about the self-employed, commissioned salespeople, immigrants, minimum wage earners?
    Which one of these people can afford to pay for financial advice?
    What do you think they save? You need a reality check my friend.
    Your article is silly.
  • Adrian George | 26 Jan 2018, 08:38 AM Agree 0
    While we are fee based anyway, the author is ignoring a few key things:

    1) Loss aversion. If you've ever worked with the public instead of just being a portfolio manager, you know that many clients are much happier not to physically pay a fee. I literally have had a client tell me that while they know it was cheaper and they would be able to deduct the applied fee, they nonetheless hate the thought of paying a fee. Even summer who sought out a fee based advisor for an annual fee rather than imbedded have told me this.

    2) The author is confusing advisors with salespeople. The banks have thousands of staff being put forward as advisors who actually have nothing more than a mutual fund license, and often very little experience (I say this having worked at four banks for 17 years). Worst they are always pushing their own house funds. Would a ban impact this channel? Not in the slightest. In fact, likely more would use them rather than paying a fee directly. Is that truly better for the client?

    3) What is wrong with the client having a choice as to how to pay, rather than an outright ban? Why is this an either/or scenario?

    I think your author needs a lot more real world experience.

  • Tim | 26 Jan 2018, 03:14 PM Agree 0
    I agree, many balk at writing a cheque or seeing it come out of a deposit.
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