A number of groups have issued statements following the launch of the Canadian Securities Administrators’ (CSA) consultation on banning embedded commissions.
The Portfolio Management Association of Canada (PMAC), which represents more than 230 firms that manage more than $1.5 trillion, expressed its support for the initiative. "Avoiding embedded commissions is not new,” says Michael Mezei, PMAC Board Director and President of Mawer Investment Management. “Traditional investment counsel/portfolio managers follow the long-standing practice of charging fees to clients directly with these fees being clearly established from the onset of the relationship and reported when fees are deducted from a client’s account.”
The Investment Funds Institute of Canada (IFIC) was rather less enthusiastic. IFIC president and CEO Paul Bourque warned that prohibiting commission could "significantly disrupt" access to investment advice for many investors. “Wealthier investors are unlikely to feel the impact of the proposed commissions ban, but many middle class investors (those with less than $100,000 in assets) who make up the largest population of investors will have to choose between paying higher fees and foregoing financial advice,” he says. “Smaller investors – those with assets less than $50,000 - may be unwilling to pay higher fees for investment advice or, if they are willing, may have difficulty finding an advisor willing to serve a small account.
The financial advisors association Advocis has launched a digital campaign centered around its new financialadviceforall.com web site, which discusses the prohibition of commissions and the negative effects it may have for Canadians. "It's a direction we oppose, it's ill conceived, and it will hurt the majority of Canadians," says Advocis President and CEO Greg Pollock in an accompanying video message. "By banning commissions, you limit the access to financial advice for main street Canadians."