Industry News

Advisors, firms must work together to educate regulators and the broader public on the important role that the industry plays

By Megan Harman |

Financial advice plays an extremely important role in Canadian society, and the financial services industry must work together to ensure regulators and consumers recognize this role, according to Chris Reynolds, a member of the Investment Fund Institute of Canada’s value of advice task force.

Speaking at the Independent Financial Brokers summit in Toronto on Tuesday, Reynolds -- who is also president of Investment Planning Counsel Inc. and a former financial advisor -- explained that IFIC’s task force was established to compile and disseminate fact-based, independent third-party research that conveys the importance of financial advice to Canadian consumers.

“[Advisors] provide a vital role in Canadian society,” he said. “It’s our responsibility to educate the regulators on what those roles are, and how we fit into the framework of Canadian financial planning.”

He pointed to a variety of surveys and research papers displaying the benefits of financial advice, and the challenges that consumers face when they don’t have access to professional advice. For instance, one survey revealed that investors who work with a financial advisor are considerably more comfortable financially, more confident about having enough retirement savings, and generally more optimistic about their future.

The role that advisors play includes not only investment advice, but also comprehensive financial planning, educating consumers and encouraging savings, among other aspects. Reynolds pointed to a survey showing that on average, clients receive five distinct services from their financial advisor, including such services as investment advice, estate planning and tax planning. And advisors do not receive compensation for many of the areas in which they make recommendations, he added.

“What we really do, is help people make better, more intelligent choices with money,” Reynolds said.

He argued that regulators do not recognize these important services that advisors provide. Rather, he said policymakers tend to view the financial advice industry as a transaction-based business. As a result, industry regulations are often misguided, focused on individual transactions and ignoring the deep relationships inherent in the business.

“We have deep relationships with our clients,” he said. “We are a relationship-based business, and this is one of the biggest points that we have to get across.”

Added Reynolds: “We are not just a transaction-based industry.”

Reynolds pointed out that the role of the industry is becoming more important as pension plans become less prevalent and Canadians’ responsibility to independently save for retirement grows.

“Clients need to invest to be able to provide for their retirement -- it’s not like the old days,” he said.

Advisors, he said, should be a key part of the solution to the retirement savings crisis. “We promote a saving and investment culture.”

Reynolds called on advisors and industry firms to work together to educate regulators and the broader public on the important role that the industry plays. He also urges the industry to play a greater role in financial literacy. He calls for courses on the basics of financial planning to be mandatory in high schools across Canada.

“It’s up to us to bring that to the forefront,” he said.