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Dale Jackson

Personal Finance Columnist, Payback Time


The province that brought Canada universal health care is stepping up to protect mom-and-pop investors from incompetent and unscrupulous financial advisors.

Saskatchewan is moving forward on legislation to regulate the titles of “financial planner” and “financial advisor.” The act restricts the use of the commonly used titles to those who hold an approved credential from a government appointed body.

Quebec is currently the only province with title regulation in place. Ontario’s Financial Professionals Title Protection Act received royal assent in May 2019 but the process of implementing it has gotten bogged down – likely due to the COVID-19 pandemic – and it’s not clear when it will come into effect. For now, most Canadians remain vulnerable to bad financial advice from those claiming to be professionals.

The push to regulate advisors has been coming from the advisors themselves. The Financial Advisors Association of Canada (Advocis) has been calling on Ontario – Canada’s financial centre – to take action for several years. 

Although a licence is required to sell financial products in Canada, there is no minimum education requirement to provide financial advice in most of the country. There is also no single registry or database where an investor can go to verify their advisor's credentials and disciplinary history, and no consistent continuing-education requirements.

Advocis argues the lack of regulation for financial advisors puts investors at risk of not only receiving poor advice, but also falling victim to fraud.

To highlight just how vulnerable most investors are, Advocis commissioned a 2018 survey by Abacus Data that found only 24 per cent of respondents were aware that anyone, regardless of education, training or membership in a professional governing body, can legally call themselves a financial advisor. In most provinces and territories, lawyers and doctors need degrees to practice their professions. Truck drivers, electricians, plumbers and even morticians also need formal educations to be licensed. 

The research also found that younger people between 18 and 30, and those with lower incomes, place the highest levels of trust in the financial advisor title. And 80 per cent of respondents felt all financial advisors should be subject to a mandatory code of professional conduct, while 91 per cent said they would support the Ontario government passing new legislation to regulate the title of financial advisor. 

Advocis says the problem is widespread but is calling on the province of Ontario to take the lead and require every financial advisor to be a member of a professional governing organization and adhere to a common code of professional and ethical conduct, maintain mandatory professional liability insurance, complete ongoing professional development, and commit to a fair and impartial disciplinary process.

It is yet to be seen how stricter regulations for advisors would impact fees. Even without formal accreditation, investment fees for Canadians are among the highest in the developed world. After decades of calls for fee regulation the investment industry, recently-imposed measures to provide more clarity on fees but has not taken any significant measures to reduce them.

At the heart of the fee issue are annual trailer fees imposed by mutual fund companies to reward advisors who sell their products. A trailer fee is baked into a bigger annual fee called a management expense ratio (MER) based on a percentage of assets invested in the fund. MERs generally range from two to four per cent on segregated funds. A trailer fee is typically one per cent, which could add up to thousands of dollars for long term investors.

Technically, a trailer fee is for ongoing advice but many discount brokerages that do not offer advice continue to collect them.

Even for advisors who actually give advice, there are concerns their direction will not be based on the best interest of the client, but rather the mutual fund that pays the best trailer fee. 

Payback Time is a weekly column by personal finance columnist Dale Jackson about how to prepare your finances for retirement. Have a question you want answered? Email For specific advice, please consult a qualified financial advisor.