The wealth-management industry is broken, says one Toronto-based financial advisor, and more regulation isn’t the answer advisors and their clients are looking for.
Daniel Hanzelka, financial planner and coach at Financial Reset, believes regulators – like the Ontario Securities Commission (OSC) – operate in damage-control mode, rather than implementing effective change. More regulatory compliance and more paper work won’t solve the problem(s), he says.
“When they (regulators) feel like there is a fire, they concentrate on that issue,” says Hanzelka. “(The industry) is broken because advisors are frustrated; the end consumer is frustrated …. it’s time to figure out how we can make this work.”
Hazelka’s comments come in the wake of the U.K. and Australia’s ban on embedded fees on products like mutual funds – a move many Canadian advisors are against.
Arguing that Canada has not seen the same industry mishaps as countries across the pond, some advisors say altering fee structures and tightening disclosure rules here will negatively impact them, and their clients.
“If you look at what’s happening in the U.K. and Australia, there is a huge backlash … something like one in three advisors are leaving the industry,” says Hanzelka. “Those rules were put there to protect the consumer … but I think the consumer is going to pay for it. A lot of people are not going to have an advisor.” (Continued on Page 2.)