It’s both an exciting and challenging time to be an advisor in Canada. The financial services industry is undergoing unprecedented change and that’s placing a pressure on all investment professionals, and advisors specifically, to adapt.
“For younger advisors or those just entering the industry, the changes currently happening open up a lot of opportunities,” explains Cary List, President & CEO at the Financial Planning Standards Council
(FPSC). “But those who have been in the business for a long time are probably quite frustrated by the changes. The biggest trend right now is the unprecedented number of regulatory issues that are bubbling up.”
List explains that, even from the perspective of the FPSC, keeping up with all of the regulatory changes is increasingly difficult. “As a standard setting body, that is in constant communication with the statutory regulators, securities commissions and governments, it’s a challenge for us to wade through how these pieces all fit together,” List says. “So, from an advisor’s perspective - who has a busy day job - it’s extremely challenging for them to keep up.”
Despite the challenging current environment, List does believe that advisors need to be more aware of what is required of them. Yes, advisors are under a lot more scrutiny, but that’s not exactly a bad thing. “Those who have focused on product sales are probably the most pressured because, if you look at the biggest regulatory initiative right now – the Canadian Securities Administrators Best Interest Standard Consultation Paper – that fundamentally changes the way the industry needs to look at the advisor-client relationship,” List says. “From CFP professionals’ perspective, it plays into what they’ve been trying to do for a long time, which is to provide value added professional advice that is not about product selection. However, the industry has been product selection focused for a long time.”
Technology is also having an increasing impact on advisors, and the pace of FinTech innovation and digitization in general is expected to pick up in the next couple of years. List believes that, in order to remain competitive, advisors need to embrace the innovation. “It’s time to adapt and upgrade; time to refocus on what your client values,” he says. “That plays into technology. As an advisor, you can learn how product decisions and portfolio rebalancing can be done by technology, which allows you to focus on the human side of client relationships.”
List encourages advisors to remain current in important areas by taking courses in behavioural science and finance, and ethics, which can help advisors tackle challenging ethical issues and understand all of their obligations.
“Advisors should also learn about the various FinTech firms and technologies out there and let go of the view that technology is a competitor,” List says. “Seek out companies that can help you add better value to your clients. And, get ahead of the fee issues of CRM2 that are coming into full force in 2017. Be proactive in transparency with your clients around fees and cost structures, they appreciate that.”
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