IAP panelist calls out "glorified salespeople"

IAP panelist calls out "glorified salespeople"

IAP panelist calls out "glorified salespeople" A day after transactional advisors spoke out against a panel’s recommendations on banning embedded commissions, a member of that group is defending the call as the best way of protecting investors from “glorified salespeople.”

“Look up the definition of commission sales in itself. It says it all.” said Ken Kivenko, one of eight sitting on the Investor Advisory Panel (IAP). “They’re salespeople and they have a mandate to sell. Most of them aren’t looking out for the client’s interest but more so following the directives of their firms to sell products.”

His comments comes after some advisors praised the OSC for assessing the true impact of banning embedded-commissions before heeding the IAP’s call and riding the regulatory wave seen elsewhere in England and most notably, Australia – contrary to what the IAC feels is necessary.

Kivenko said there are a series of studies, research papers and other commission reports about embedded commissions and added there is not one report he’s seen that acknowledges no “bias” on the part of advisors working for commissions, locking their clients into funds that aren’t beneficial to their financial health, long-term.

“It’s like going to the doctor. You have a problem and he prescribes you something. He doesn’t give you drugs that will (deteriorate) your health, but he’d prescribe something that works, that will (ensure) your health. And the two are tied together – financial and physical health.”

Because of that, he reiterated that the OSC shouldn’t languish on banning commissions and added that advisors who argue that Canada shouldn’t follow the lead of Australia or similar countries who have taken these measures should realize that Canada is not unique.

That said, if going to your doctor and getting a prescription is a choice – one can assume the consumer makes the appointment – then why not give people the choice, said Debbie Hartzman, a wealth advisor and financial planner at Professional Investment, an independent firm.

“Clients are not stupid,” she told WP. “They can make the choice for themselves.”

“The evidence exposes the error in suggesting commission based advisors chase higher paying funds. If advisors were chasing payouts, the largest funds would be those that pay more. There are so many factors to incorporate, that fee alone is just a smoke screen for those "investment advisors" who don't really work for their clients.”

She said that out of her book of more than 500 clients, she’ll probably drop 150 of them because she won’t get paid for her services. She also challenged critics of embedded commissions, those who claim they are “salespeople” not advisors, to come learn the ropes at her office for a week.

“Then we’ll see who’s a salesperson.”