Taxpayer-funded advertisements from the Department of Finance have irked the financial advice industry. This $4.14 million advertisement campaign, which began in early January and was slated to end in early February, featured print and television announcements lauding the benefits of the new tax-free savings accounts (TFSAs) and refers the public to "contact your bank, credit union or other financial services provider to open an account today."
In January, The Investment Funds Institute of Canada (IFIC) issued a news release to chide the government for ignoring the funds industry and financial advisors. In a letter to The Department of Finance Canada, Joanne De Laurentiis, president and CEO of IFIC, underlined the fact that the ads did not refer to the fund industry's and advisor's role.
The letter gave an example of how the financial advice channel can help. "Investors seeking to decide on whether to invest in a TFSA could benefit from discussion of the tax implications of TFSAs as compared to registered retirement savings plans (RRSPs). This advice component may come best from financial advisors with training credentials, such as those who work in Canada's investment funds industry."
IFIC's letter also stated that the association recognizes that the television advertisements were not intentionally undervaluing the fund industry, but requested that if the ads should be re-used that they include wording "along the lines of ‘speak with your financial advisor...'"
Greg Pollock, president and CEO of Advocis, The Financial Advisors Association of Canada, also sent a letter to the Department of Finance protesting the fact that the ads did not mention financial advisors. "As it stands now, banks and other large financial institutions have a significant - and sanctioned - advantage over smaller advisors and planners who operate outside of these organizations," stated Mr. Pollock.
His letter went on to explain that, "In many cases, financial advisors and planners have established long-term relationships with their clients. They have a complete picture of their clients' goals and needs in addition to having likely created a financial plan to achieve these objectives. Neglecting to mention financial advisors and planners who do not work for large institutions reduces the options available to consumers, lessens competition and does a disservice to many of our members."
Insurers are not happy about the ad campaign either. Roy Firth, executive vice-president, individual wealth management with Manulife Financial, told The Insurance Journal, "We're really ticked!" He added, that the government is "basically saying ‘here is this great new thing, talk to your bank or credit union or other financial services provider.' It doesn't even mention financial advisors or life insurers... The financial advice channel has not been recognized by the government as an important source or supplier for these products."
Considering that this ad campaign was paid by tax dollars, Mr. Firth says he believes it is too narrowly focused. "It certainly is not inclusive and really focuses on the banks...The insurance industry as a whole, companies and advisors, have been overlooked."
On behalf of, and with the contribution of its life insurer members, the Canadian Life and Health Insurance Association (CLHIA) also sent a letter to the Department of Finance stating a similar view to that of IFIC, "that the advertising did not clearly communicate that life and health insurance companies and investment firms also offer TFSA's, and therefore, referring in the advertising to financial advisors (who typically sell both products) would be more appropriate," said Wendy Hope, spokesperson for the association.