Re: Letters to the editor: Commissions influence advisors' recommendations, www.investmentexecutive.com, Aug. 12, 2016
In a world without embedded commissions, the mutual fund companies that currently embed their service fees would reduce their management expense ratios by an amount equivalent to that fee. Then, I would charge the client directly the exact amount I used to receive from the mutual fund company.
So, I need someone to explain to me how removing embedded fees will enhance the client experience? Don't trot out the "transparency" argument because I already disclose to clients the percentage and dollar amount they pay now in fees.
Also, please explain how a fiduciary standard will work. How will someone evaluate whether or not I'm truly placing my client's interest ahead of mine? I think I do now, but obviously that will be up to someone else.
Will there be hard rules or principles-based guidance? How will that be measured? Will I not be able to recommend the investment companies I currently use? As the company in which I place a large amount of my client's investments also owns the dealer I use to process my client's trades, will that arrangement be deemed to be an automatic conflict and put me offside? Will self-directed RRSPs be banned because of the annual trustee fee? Will I be forced to make recommendations on price alone? Who will monitor me? Will I be considered guilty until proven innocent?
I'm just wondering if anyone has thought out how the fiduciary standard will be measured, monitored and policed.
Don Janzen, CFP
Senior Financial Planning Advisor
Bowman & Partners
Assante Capital Management Ltd.
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