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Our industry operates in a complex and ever-changing regulatory environment. The challenge for advisors and their firms is determining how to turn regulation into an advantage for clients and for themselves.

By now, head office teams across the country have implemented the necessary tools, policies and processes to comply with the client-focused reforms (CFRs). All the requirements are now fully in effect with the goal of improving client outcomes.

Not ones to rest on their regulatory laurels, the regulators have now proposed new requirements for total cost reporting (TCR), a joint proposal by the Canadian Securities Administrators and the Canadian Council of Insurance Regulators. Intended to enhance and harmonize cost disclosure for investment funds and segregated funds, it’s part of an ongoing global shift toward increased fee transparency in the investment industry.

Regulators will continue to push forward with TCR and other new initiatives to protect investor interests. As an industry, we need to think about this ongoing reality and approach it strategically, keeping the client as our focus. By doing so, we’ll deepen client relationships and reinforce the value of advice.

What’s a firm to do?

Support advisors with time-saving and client-friendly digital solutions. Introduce technology for advisors that streamlines how they can comply with requirements. Digital solutions should be designed to support more comfortable client conversations while ticking all the compliance boxes.

Use client research to inform new processes. A recent Investor Knowledge Study by the Ontario Securities Commission found that about three in 10 Canadian investors self-assessed their financial knowledge too highly. Referred to as the “better-than-average effect,” investors were more likely to perceive themselves as above average in financial knowledge than they were.

To understand what clients want or understand, ask them. Leverage client research insights to build new tools and processes. Then, train advisors to identify a client’s actual level of financial knowledge. This will empower advisors to provide clients with guidance and education that corresponds to their actual level of financial knowledge and needs.

Provide humanized compliance training. As part of the compliance process, develop training programs for advisors on how to provide an optimal client experience. Coach them on how to have comfortable, compliant client conversations. Share investor research that can provide advisors valuable insight into investor perceptions, and their expectations of advisors.

What’s an advisor to do?

Accept technology’s role in the future of advice. At a recent Future of Advice panel, I said the future of advice in our industry will involve a combination of digital and human interactions. Advice relationships will likely be on a spectrum, with digital on one end and human on the other. Where a particular firm or advisor lands on the spectrum will depend on the advisor and the needs of the client.

Imagine a young, digitally savvy client with straightforward needs. They may choose do-it-yourself at first, with more technology support and less human involvement. As they approach different life stages and develop more complex financial needs, they may increasingly value the expert advice and support they can get only from a human advisor. As a result, they may wish to move along that spectrum.

Technology is not a threat. It should complement your advice and value. Leverage it and allow it to help you deliver personalized advice, at scale, to all clients.

Understand what the regulations are designed to achieve. Regulatory compliance isn’t something to balk at. Instead, think about the objectives of the rules and how they’re designed to protect or inform investors. By understanding the intent, you may be better able to provide context for clients, which will make for easier conversations. Clients will appreciate that what you’re doing supports their best interests.

Go one step further and get to know your compliance department. When you understand their role and gain an appreciation for their end goals and objectives — to protect and inform clients — you can form a meaningful and beneficial relationship.

When the going gets tough, don’t hide. Volatility is tough for many clients and causes a lot of worry and concern. Be sure to stay in touch with clients and help put their minds at ease, especially during uncomfortable times. Don’t give in to a temptation to avoid difficult conversations. Instead, think about all the opportunities for proactive client touchpoints and communicate, communicate, communicate.

Keep it simple. The OSC’s Investor Knowledge Study found that investors have the least knowledge when it comes to investment costs and investor protections. Help improve their knowledge by talking to them about the fees they pay and ways they can protect their portfolios. But keep it simple. Most clients don’t understand industry jargon, so try not to overcomplicate your explanations.

Focus on what matters to clients. Canadian investors value trust, expertise and ethics in their advisors. So, have clear and transparent conversations with clients to help build that trust and credibility. What matters to clients is achieving their goals. Clients need your support to articulate their goals and measure their progress toward those goals. That will help them understand the value you provide for the fees they pay.

Susan Silma is head, regulatory business practices, with Sun Life Financial Investment Services. She is a lawyer and former regulator, and is passionate about integrating compliant practices into a positive client-advisor relationship.