New licensing rules raise the bar, but clients should push advisors further
For decades, anyone in Canada could call themselves an investment advisor. That just changed.
Investment regulators gave final approval in March to force registered advisors to follow the know-your-client rule.
According to BNN Bloomberg contributor Dale Jackson, the move ends years of legal limbo in which industry titles were inconsistent and there was no legal requirement for advice to be in the best interest of the investor, outside of the rare registered fiduciary.
The Canadian Investment Regulatory Organization (CIRO) now requires members to earn a defined title of financial advisor, meet minimum education standards, and abide by a code of conduct.
The move, Jackson wrote, forms part of sweeping legislation giving regulators legal authority over who qualifies to give investment advice.
Investment regulators gave final approval in March forcing registered advisors to follow the know-your-client rule, BNN Bloomberg reported.
The move ends years of legal limbo in which industry titles were inconsistent and there was no legal requirement for advice to be in the best interest of the investor, outside of the rare registered fiduciary.
Courts have upheld the rule as a check against advisors placing clients in high-risk products they do not understand, Jackson noted, and investment firms must ensure the requirement is enforced across their advisor networks.
But Jackson's central argument is that suitability is a floor, not a finish line.
Writing in BNN Bloomberg, he outlined what clients managing retirement portfolios are entitled to demand beyond the form:
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A clear long-term investment strategy and asset allocation plan
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Tax-saving use of RRSPs, TFSAs, and non-registered accounts
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A transparent fee structure with a strategy to reduce costs as the portfolio grows
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Consistent contact beyond the regulatory minimum, including outreach during market volatility or major life changes
On fees specifically, Jackson observed that wealthy clients often pay less than one percent because they generate higher revenues for the advisors who helped build that wealth.
A growing portfolio, he added, should eventually allow high mutual fund fees to give way to lower-cost alternatives and direct investing.
The relationship, he added, carries obligations in both directions: good advisors need clients who commit to saving, stay engaged, and hold realistic expectations.
