The Financialist • Issue 131 • October 2016
Starting in 2017, you will receive a report detailing all fees paid to a dealer member firm for investments in any securities account. In your case, that means all fees paid to Rogers Group Financial for managing your securities account(s) such as stocks, bonds, mutual funds etc.
This is a positive step for our industry as a whole. You will now have a better opportunity to ensure that you are getting the appropriate services for the amount paid.
Too often in our industry, investors believe there is no cost for managing their accounts as the fees are embedded in the product – making it harder to understand the advice and services received as opposed to what was paid and thus, not
allowing investors to make an informed decision on the benefit versus the cost.
It is very common for investors to believe investments they have at their local bank branch are cheaper or even have no
cost compared to other investments they may hold. They are often surprised to find the compensation paid for advice was equal to the fees paid to Rogers Group
Financial for the same investment. Furthermore, the holistic financial planning advice we provide far exceeds any advice given at your local bank branches.
As a firm, we will now be able to tell our clients exactly what they paid for the services provided. In the past, we could only give clients a close estimation of the total cost based upon the stated management expense ratio (MER) of the investment.
However, even though this is a positive change, we strongly believe the industry still needs more disclosure to allow clients to make an informed choice when deciding on which products and services they want, and to help them determine the best course of action that suits their particular situation.
For example, the use of proprietary products is not really monitored or disclosed. For us, this is an extreme example of a conflict of interest that must be controlled.
A proprietary product is defined as an investment that is produced and sold through the same firm.
As an independent firm, we do not create our own investment products. Firms that use proprietary products not only get paid for giving advice but they are also compensated through the profits built into the production of the investment itself. In most cases, the proprietary product is the most recommended investment option at that firm. This is a conflict of interest because that firm is better off when their advisors sell this product versus
other products from outside companies.
Regulatory change is happening slowly but will continue to improve. Our industry is dominated by bank-owned firms and changes to disclosure and proprietary products is not in their best interest and thus, the change happens quite slowly. But it is starting to happen.
We will continue to sit on regulatory pan- els, working groups and other industry organizations to help bring regulatory changes that benefit the individual clients rather than benefiting the big investment firms in Canada.
If you have any questions or would like further information, please email us at email@example.com or contact your Rogers Group Financial advisor.