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FINAL WORD
Financial Wellness is the Future
BY GREG POLLOCK
E
very day, Canadians make decisions that can either set them up
for financial success or failure. Major life events, such as
the purchase of a new home, the arrival
of a newborn baby, or sending kids off
to college, can cause financial discomfort
for a period of time. Yet, for some individuals, financial stress can be chronic.
According to the latest Manulife
Financial Wellness Index, two in five
Canadians say they are financially
unwell. Respondents were mostly concerned by debt (82 per cent), not saving
for retirement (60 per cent), were
stressed due to their financial situation
(67 per cent), and were not financially
prepared to protect their loved ones
should an unexpected event such as
death, disability, or serious illness occur
(83 per cent).
Financial wellness plays a significant
role in our overall physical and emotional well-being. This is why professional
financial advice is a key element of a
holistic approach to health. The ongoing threat to access to
financial advice should greatly concern Canadians of all ages.
Those who have less money to invest, whether seniors on a fixed
income or young people just starting to save for retirement, are
most at risk of losing access should a ban on embedded commissions come to pass.
You are likely aware that the Canadian Securities
Administrators’ (CSA) new plans would require clients to pay
their advisors directly. While their proposal is intended to protect
consumers, we at Advocis have cautioned that moving in this
direction will do more harm than good in the immediate and
long-term. The effects will not only be felt by average citizens,
but also by the economy and healthcare system, to an extent.
Many financial advisors are small- and medium-sized business owners and are a significant part of the overall finance and
insurance industry. Their total direct and indirect economic
impact is about 1.4 per cent of total Canadian GDP (approximately $25 billion). Consequently, regulation that reduces access
to financial advice hurts our country’s growth.
The CSA’s consultation period ends next month, and we
hope that discussions continue into the summer so investors’
viewpoints may come to the forefront. Right now, it’s crucial
that Canadian investors speak to their MPPs and MLAs.
If your clients want to retain choice
in how they pay for financial advice,
they need to let their local politicians
know. If you haven’t already done so,
please encourage your clients to visit
FinancialAdviceForAll.ca and take
action by sending an email to their MPP
or MLA. It’s also important for you, as
a financial advisor, to make your opinion known.
We fully support fee transparency
and disclosure. It’s not uncommon for
investors to assume that financial advice
is free because they pay through a commission. However, the purpose of CRM2
is to increase awareness regarding fees.
Investors need to understand how much
they are paying, but this doesn’t mean
they should be stripped of their choice
in how they pay for financial advice.
A new American study by JD Power,
which surveyed 1,000 investors about the
Department of Labor’s fiduciary rule,
found that most investors who pay commissions do not want to switch to feebased structures on their retirement accounts. These findings are
similar to what we discovered in our own 2015 investor study
where we surveyed more than 1,500 clients of Advocis members.
When asked if they would prefer that the government leave the
choice to them whether they pay an hourly fee, an embedded fee,
or a percentage of assets under management, 88 per cent responded “yes.” Compare this to the four per cent who responded they
would prefer to pay an hourly fee of $150 to $350. It’s clear that
investors would like to decide for themselves how they compensate
their financial advisor, and tend to favour a commission structure. However, their preference continues to fall on deaf ears.
Although this is a critical time, it’s also an opportunity for
advisors to set themselves apart and show their value. One way
to do this is through continuing education. With the summer
months upon us, I encourage you to join us at one of three
national schools in Kelowna, B.C., Banff, Alta., or Georgetown,
PEI. It’s a fantastic opportunity to connect with your fellow
Advocis members in a beautiful setting while gaining new business insights. It’s one of the year’s highlights, and you can earn
up to 15 continuing education credits. Find out more at
Advocis.ca/ALC. I wish you a happy and safe summer. 
Those who have less
money to invest
are most at risk of
losing access should
a ban on commissions
come to pass.
34 FORUM MAY / JUNE 2017
GREG POLLOCK, CFP, is the president and CEO of Advocis.