“Raising the Bar" – Advocis Regulatory Affairs Symposium


The current retail investment experience is tilted in favour of financial professionals and more needs to be done to level the playing field between financial advisors and clients. That was the message Susan Eng brought with her to a symposium on investor protection hosted by Advocis, the Financial Advisors Association of Canada.

The session occurred soon after the release of Advocis’ paper “Raising the Professional Bar”, which proposes a self-governance model for the financial advisory industry that prioritizes the interest of clients, requires substantive education requirements for professionals, includes disciplinary processes with the authority to prevent advisors from selling or advising, and provides investors transparency of advisor’s credentials and disciplinary history.

Gaps within the current regulatory framework leave investors exposed

Susan Eng told the room of composed largely of financial professionals that the current advisor-investor relationship puts investors at an unfair disadvantage and that the financial advice industry can help level the playing field. She pointed to gaps in the current regulatory framework that leave investors exposed, including a lack of clear education and credential requirements for advisors, no real requirement to act in the client’s best interest, lack of an effective industry-wide disciplinary processes, and even the lack of regulation over who can call themselves a financial advisor.

Regardless of model, higher standards are needed

There was unanimous consensus on the panel that higher standards are needed regardless of which model the industry adopts. The panellists emphasized that the status quo is not acceptable but that the industry as a whole needs to make changes to achieve greater balance and restore the trust in the investor-advisor relationship. Some recommended changes to the current regulation included:

  • Set the bar high from the start – Weed out the “bad” advisors from entering the industry with robust education/training requirements.
  • Have a single designation – Investors should know what the title “financial advisor” means. Investors should not have to decipher the multiple types of designations and whether or not they are accountable to adequate standards.
  • Have meaningful consequences– Misconduct, once proven and advanced through a disciplinary process, should mean advisors lose the privilege to continue to sell and advise on all types of investments.
  • Pave a clear pathway for restitution – Most importantly, investors should have easy access to a complaint process and be assured that they can get their money back if lost as a result of an advisor’s misconduct.

CARP has been advocating for better investor protection, particularly for higher standards and a clear pathway for restitution. According to CARP polls, most members think that there is already a best interest standard in place, revealing an expectation gap that leaves investors vulnerable. If the industry does not want government interference, the industry must do a better job at regulating themselves. The industry must see that while higher standards offers better protection for investors, they actually uphold the industry’s reputation by preserving the relationship of trust between the investors and advisor to the benefit of the industry.

Read Advocis’ proposed self-governance model.

Read CARP’s policy brief on investor protection.

Use IIROC’s tool to better understand financial certifications and designations.