Canada’s financial services industry has a tendency to study problems to death but never solve them.

There are many examples of this: fund governance, meaningful and timely disclosure, financial intermediary proficiency, meeting clients’ personal financial planning needs, modernizing securities regulation and effective enforcement of securities laws — to name a few.

While we dither, the world is passing us by. There is growing frustration on the part of financial advisors and their clients. Sometimes the shortcomings are caused by the systems and technology used by advisors’ firms.

An example of this is the continued use of the static investment and financial planning software that was developed over the past 10 to 15 years. As Michael Curtis points out in his perceptive book, Client-Centred Life Planning: The art and science of life planning, there are drawbacks to this static model.

He says it fails to meet clients’ expectations because it was designed for advisors to prepare plans for clients based on advisor-centred financial planning tactics, such as tax, investment portfolio and insurance strategies. Clients are often disappointed with these financial plans because they do not take their lifestyle options into account.

Curtis says recent advances in technology and the development of holistic life-planning software, which builds in real-life simulators, has shifted the personal-planning paradigm to what he calls “client-centred life planning” that reflects clients’ vision of their lives. They see the advisor’s role as that of a trusted “chief financial counsellor” whose advice is not coloured by the products that may be chosen to implement the plan. Client-centred life planning, he says, enables the advisor to separate the planning process from the implementation process and to establish a fee arrangement that is not dependent on commissions.

Curtis’s suggestions are worth considering, especially by financial advisors who want to be recognized as professionals. He cautions that advisors who are not independent may, however, have a problem persuading their firms to allow them to use dynamic client-centred life-planning software, because some firms have built-in compliance software that only recognizes plans that are developed using old-era, static, financial planning software.

This raises the issue of compliance rigidity that many of you have characterized as a regulatory burden. Here, in your clients’ interests, you have reason to complain. Technology should be an enabler, not a barrier to meeting client needs.

Another problem area for advisors, albeit unrelated to technology, can be found in the Ontario Securities Commission’s January News Releases, which advises that the OSC will not take enforcement action against dealers regarding dealer due diligence and supervision if the dealers repay investors all fees they received from Portus Alternative Asset Management Inc. in connection with client referrals. Buried in the fine print is the fact that the Mutual Fund Dealers Association will continue investigations into the sales practices of referring advisors and other matters relating to the conduct of dealers in referring clients to Portus.

A settlement of this nature, which hangs advisors out to dry, seems to abrogate the role of dealer responsibility for due diligence and oversight of advisors’ activities. This dealer oversight role, which is a foundation of the registration regulatory strategy, appears to be undermined by the OSC settlement.

It also seems to place the obligation to conduct due diligence and “know your product” directly on the advisor instead of being a shared obligation that normally would be carried out by the dealer on behalf of itself and its advisors.

Advisors beware. IE