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Dale Jackson

Your Personal Investor


A new survey conducted by CARP exposes how Canada’s provincial investment regulators do little to protect average investors.

The results are less surprising than the actual questions, which focus on the most basic safeguards already in place in most of the developed world.  

The country’s largest seniors advocacy group found 89 per cent of respondents support a Best Industry Standard. That means formal rules that require financial advisors put their client’s investment objective ahead their own compensation or perks. In other words, investment products should be recommended because they are best for the client – not because they pay the highest fees to the advisor.

Best Interest Standards are already enforced in the United States, United Kingdom, Australia, and European Union.

The survey also found 79 per cent of respondents support the elimination of embedded fees. A good example of embedded fees are management expense ratios on mutual funds. MERs are annual fees based on a percentage of the amount invested. A typical MER of 2.5 per cent might not seem bad, but most investors with $100,000 under management would flip if they were handed a bill for $2,500 every year.

The industry knows dollars have more of an impact than percentages and that’s why they have fought so hard to maintain embedded fees. The same CARP survey found 44 per cent of respondents are not even aware that their advisor may be collecting embedded fees.   

New disclosure rules known as CRM2 require advisors to reveal their fees in dollars, but the bulk of the fee collected by the mutual fund company can remain shrouded in a per cent.

CARP is calling for the elimination of embedded fees.   

The final survey question found 89 per cent of respondents support regulating titles for financial advisors. Investors might be surprised to learn just about anyone can call themselves a financial advisor. Formal designations are currently an alphabet soup where it’s almost impossible to tell the difference between a mutual fund seller and a full service investment advisor.