Letters to the editor: Advice and fees

According to the PwC July 2014 report, Sound Advice: Insights into Canada’s Financial Advice Industry, of the 100,000 advisors in Canada, which include those with CFP and CLU designations, only 450 are fee-only advisors. These individuals make the move to the fee-only model after a decade or more in the industry, and when their client base reflects such a need.

Another fact, clients with small to medium-sized portfolios may actually pay higher fees if the current mutual fund fee model were to remove consumer choice and operate from a fee-only platform. The focus should be on ensuring that consumers have access to professional financial advice, not on how they pay for it. Why not allow consumers to choose based on their needs?

Change is coming so let’s make decisions based on fact. To do otherwise, would be irresponsible. We must ensure that facts guide the evolution of our profession. Advocis is the professional association for all financial advisors, including those who hold CFPs and other professional designations, and remains committed to reforms that are based on fact. Consumers and our profession deserve nothing less.

Greg Pollock
President and CEO, Advocis

Re: New fee regime nixed by regulator, Investment Executive, September 2014

I am writing to you as a consumer and as an investor and strictly from that perspective.

Let me be blunt. Fees should either be negotiated between the provider and recipient of a service or should be posted in dollar (not percentage) amounts in reasonable proportion to the extent and value of the service.

It may be reasonable for a dealer to post and charge a fee of $1.50 to e-mail me or to provide me with an online link to my account statements. On the other hand, when their “service” to me amounts to no more than provision of account statements and the occasional or regular marketing piece(s), I view a charge of 1% on my $750,000 portfolio ($7,500) as exorbitant and disproportionately beyond even the extreme of what may be remotely reasonable.

I wouldn’t mind paying $2,000 for professional review, analysis, report and recommendations on my portfolio by an advisor who I select based on his/her knowledge, experience, compatibility, etc. However, it is to be noted that it is the advisor who is rendering the service, not the dealer. The dealer is merely a wholesaler of product, and as such bears the responsibility to fully and completely disclose all facts and information, including updates, related to the product and account; full stop… at least from my perspective. That’s a wholesaling and warehouse administration function by the dealer. The dealers’ charges should reasonably reflect the functions that it performs. The payment of a percentage of account fee to the dealer — whether directly or indirectly — is unjustified and removes funds from the table, funds that are better allocated to compensate professional advisors for well researched and diligent professional work.

Just my blunt opinion as a consumer and as an investor. Please note that I am not, and have never been, involved in the sale of investment stocks or mutual funds. I am, however, an investor in such instruments and my views are biased and from the perspective of an investor.

Ami Maishlish
Markham, Ont.