Good Financial Reads: Putting the Customer First

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Why It’s Time For Canada’s Financial Industry To Put the Customer First

By: Jason Heath, Objective Financial Partners, Inc.

“Scrutiny of the financial industry has been on the rise in recent months, fuelled in part by CBC News reports alleging unscrupulous practices at Canada’s big banks. The CBC’s findings may not have been surprising to insiders, who have been witness to the industry’s indiscretions for years. What is surprising is the government’s continued hesitation to force advisers to do what is right — to act in clients’ and customers’ best interests.

There are benefits to free markets with limited government intervention when open market forces or self-regulation keep businesses honest. But the general public’s lack of knowledge about financial products and financial planning coupled with limited interest in the industry properly regulating itself makes government oversight a necessary evil.

The Province of Ontario has taken the lead recently by flirting with regulation with the establishment of the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives. The final report from the Expert Committee, released with little fanfare earlier this year, identified the three biggest risks to consumers as: “the lack of specific, harmonized regulation of financial planning and financial advice; the confusing titles and credentials used by providers of financial planning and advisory services; and the lack of an explicit obligation to act in the client’s best interest.”

…It is important that consumers recognize that bank employees, mutual fund salespeople and insurance agents are often not financial planners. Or even if they are, they may not be acting as a financial planner first and foremost when their compensation is tied to a selection of products they can sell.”

Read the Full Article Here