Re: “Current commission structure hurts professionalism” (IE, August 2007).

I was surprised at the inaccurate and simplistic portrayal of the manufacturer/advisor/client relationship in this editorial. There are so many flaws, I don’t really know where to start. But here goes:

First, the article is based on several assumptions that are just not true. The first of these assumptions is that the manufacturers have undue influence over advisors; the second is that clients are not well served by advisors; the third is that advisors are overpaid; and the last — and perhaps most important — is that clients aren’t getting good value from their advisors.

With respect to manufacturing and product design, the suppliers of wealth products in Canada are so diverse (including mutual fund companies, insurance companies, private investment counsellors, structured-product providers, banks and brokerage firms) and the product range is so vast that it would be impossible for any one or set of providers to be able to exert any type of pressure or undue influence on independent advisors with respect to their choice of products for their clients.

When advisors decide to deal with certain firms, it has to do with the quality of the products and the level of service they receive. Advisors then select services they believe to be in the best interests of their clients.

Next, while different types of fee structures exist in Canada, the bulk of mutual fund, segregated fund and structured-product fees are similar across all firms — and not a distinguishing factor in the advisors’ choice of product.

At Manulife Financial Corp., we strongly believe in “Real Value to Customers”; and this applies both to the products we manufacture as well as the personal counsel advisors provide to clients. We believe that the Canadian public is well served by the advice channel in Canada, that Canadians receive good value for the fees and commissions they pay, and that the advisor community is fairly compensated.

In Canada, independent financial advi-sors provide financial advice, tax planning and estate planning, fill insurance needs and, perhaps most important, provide retirement planning for Canadians. It is widely known that, on average, investors who receive advice end up being better prepared and wealthier than those who don’t.

Why is that? Advisors encourage people to plan, spend wisely, save appropriately, pay down debt and, in general, be more astute with respect to their finances. How much is that worth?

In addition, by virtue of our current commission structures, Canadians have greater access to advice services than inves-tors in any other country.

We have more independent financial advisors per capita than most other industrialized countries, and we believe this serves us well. We don’t want advice restricted only to the elite and to those that can afford “fixed fee for service” advice models. Nor do we believe that the majority of Canadians are comfortable using self-serve investment options or dedicate the time and learning required to manage their own finances adequately.

We strongly believe in open access and that this model has served Canadians’ interest well. And the products that are distributed — mutual funds and segregated funds — have served to invest in Canadian companies and the Canadian economy — and provide for Canadians’ retirements.

Would we have the same level of savings if these products didn’t exist and if the advice channel either didn’t exist or was smaller?

Absolutely NOT. Canadians would almost certainly be worse off, and Canada would be as well.

And my last point: to insinuate in the editorial that Canadian independent advisors are not professional is an unfair and uninformed slur against a reputable, knowledgeable and highly valued group of professionals that have been instrumental in helping Canadians achieve their financial goals.

Let’s thank our lucky stars for financial advisors and the wealth they have created.

J. Roy Firth
Executive vice president,
individual wealth management,
Manulife Financial Corp., Toronto





An important clarification

Re: “Assante rides trend toward fee-based service,” by Gavin Adamson (IE, September 2007).

We appreciate the attention given to Assante’s new fee-based program in this article. However, there is one important clarification that we want to ensure has been noted.

The article states that “Assante’s fee-based platform, which has been slotted into its regular grid structure, costs clients $1,500 a year in addition to a percentage cost based on the size of their portfolio with the firm.”

@page_break@Please note that the program offers a choice of a flat rate or a percentage of assets, with a minimum charge of $1,500 per year. The article incorrectly states that there is a minimum of $1,500 in addition to a percentage.

Given the fee sensitivity that exists in our industry — and our desire to ensure the accuracy of information on our offerings — we felt it important to comment formally on this situation.

Jan Sampson
Vice president,
channel initiatives,
Assante Corp., Toronto