Without a doubt, embedded commissions facilitate smaller retail investors’ access to advice on a more efficient basis than under a fee-for-service model. For people in Canada wishing to pay separate fees-for-advice, this option is already available and growing.
At the Ontario Securities Commission’s recent roundtable, where I was pleased to serve as a panelist, we were asked whether Canadian retail investors would be willing to pay for advice under a fee-for-service model. The fact is that investors are paying for advice today—but it is done in a way that is efficient and convenient for both the investor and the advisor.
The current structure allows those with small amounts of investments to access advice—which ultimately encourages savings and helps Canadians build wealth. This is a key public policy goal of our provincial and federal governments.
There is a legitimate concern that some investors are not sufficiently aware of the fees that they pay. A measured approach will afford us the opportunity to foster better understanding of the pricing structure with new disclosure requirements.
At the same time, we will have the opportunity to observe the impacts of the commission ban in the UK and Australia. The insights we gain will enable us to assess the impact of these approaches on investors, in order to determine whether better and targeted disclosure is the best way to help them understand the cost of the products they buy.