Canadian securities regulators are currently going through the process of trying to reform our investment industry practices for the benefit of investors. \u00a0Specifically they are trying to address fee and performance transparency and are also thinking about implementing\u00a0a “best interest” standard for financial advisors in Canada. \u00a0I know, the idea that advisors should work in their clients’ best interest isn’t that crazy but regulators feel that the industry hasn’t been able to self-regulate sufficiently to keep Canadian investors safe. \u00a0Canada does\u00a0still continue to have the highest mutual fund fees in the developed world and most Canadians don’t know how or how much their financial advisor gets paid. \u00a0Other countries have already taken steps to enhance fee transparency and to eliminate practices that are harmful to investors.<\/p>\n
There have been a series of protest pieces published\u00a0in the last couple of years arguing that once investors become aware of the high fees they are paying\u00a0many will turn away from traditional advisors and as a result do themselves harm. \u00a0Many advisors will be forced to leave the industry or focus only on higher net worth customers, stranding swaths of those who need advice most with nowhere to turn. \u00a0While we imagine some instances of this type might occur, on the whole we find this argument a little ridiculous and self-serving. \u00a0To begin with, the high fee, low transparency “advice” people are getting is probably something they can do without to begin with. \u00a0Also, competitors will emerge very quickly to fill any gaps. \u00a0As Rob Carrick of the Globe and Mail points out in “