The Independent Financial Brokers of Canada has told the Canadian Securities Administrators that banning embedded commissions would force many advisors to leave the business.
In a submission to the regulators’ consultation, the IFB highlighted the views of advisors who responded to IFB’s online survey on how a ban would affect their clients and financial practices.
Fewer experienced advisors
“The survey points to the likelihood that this would create a two-pronged advice gap, ” said Nancy Allan, IFB’s Executive Director, in a statement released June 9. “Advisors told us that clients with smaller to mid-sized accounts will be unable or unwilling to pay direct fees, and that such a ban would force many to exit the business. In this scenario, clients nearing retirement would have fewer experienced advisors to rely on at a time when more advice is needed – not less.”
Impact on independent firms
The submission calls on the CSA to address the disproportionate impact of its proposals on independent mutual fund firms and advisors, and their clients.
Instead, IFB says, regulators should evaluate the effectiveness of recent improvements to disclosure of account information under CRM2, and other proposals it has identified in CP 33-404 to improve client outcomes.
“Above all, IFB recommends that the choices available today as to how and where consumers choose to receive their advice should not be limited by regulation,” stated the IFB.
The full IFB submission can be read here.