Individual investors deserve higher standards from the financial planners who serve them. Last week the process towards possible reform continued with a public hearing.
My observation is that financial planning services offered by qualified professionals has improved over the last several decades. However, there is more room for improvement.
Hopefully that will happen soon.
An expert committee was formed by the Ontario government to consider financial advisory and financial planning policy alternatives.
In April the committee published a preliminary report.
The report stated there are varying degrees of proficiency among financial planners; there is no obligation for financial planners, or sellers of financial products, to act in their client’s best interest; and the regulatory framework to supervise financial planning activities is fragmented.
By today’s standards the best way to describe the delivery and regulation of financial planning activities is ‘outdated’.
In my opinion, many financial planners do an excellent job working on behalf of their clients, which is a positive.
The negative aspect is that there needs to be stronger standards to ensure all financial planning advice is offered and regulated to the highest possible standard. The final public hearing held last week in Toronto was disappointing.
My expectations were to have more representation and opinions from individual investors, or groups that represented them. Some individual financial planning practitioners spoke, but for the most part the feedback came from representatives of the major participants in the financial planning industry, including accountants, investment, and financial planning organizations.
Lots of well-dressed, articulate, and well-paid professionals promoting how good their organization was and how they should continue to play a critical role in the governance of the financial planning and product sales business.
I have three main concerns with the process to reform financial planning activities.
First, all industry participants should be working towards what is best for the individual financial consumer. Feedback from individual investors: their perception of the industry is at times more self-serving.
Second, the major organizations represented at the hearing wanted to continue their role in policing their members.
Please help me understand the logic of continuing to allow those groups to oversee financial planning activity when in too many cases, respectfully, they have failed to adequately protect the individual investor.
Third, I am concerned that the expert committee will not have the courage to make the tough recommendations needed to fully reform and update financial planning.
Other countries have significantly reformed how financial services are regulated to the benefit of their citizens. It is time for Ontario, and indeed all of Canada, to follow that progressive trend.
True reform will be difficult. The committee has to make the correct, albeit tough, recommendations and then the provincial government has to have the will to adopt improvements into regulation and/or legislation.
We deserve improved standards for financial planning and investment product sales.
Hopefully those making critical decisions agree.