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The Voice of Canada’s Investment Funds Industry

Media Release

IFIC President Calls for Choice and Access to Advice for Canadians


Toronto, ON – June 15, 2017 – In a speech today at the Economic Club of Canada, Paul C. Bourque, Q.C., president and CEO of The Investment Funds Institute of Canada (IFIC) called on regulators to protect investor choice and access to advice for Canada’s middle-income Canadians.

“We should always be looking for ways to improve investor protection, and to foster fair, efficient and competitive capital markets,” Bourque stated. “What we should avoid is introducing measures that add to the regulatory burden without providing proportionate improvements in investor outcomes.”

Bourque’s remarks come in the midst of consultations by Canada’s securities regulators on whether to introduce a best interest standard, and whether to ban embedded commissions.

“The potential impact of recent regulatory proposals will permanently alter the landscape for retirement savings in Canada – and not necessarily for the better,” Bourque cautioned.

On the issue of whether to ban embedded commissions, Bourque said: “Banning embedded commissions will have long-term negative impacts on the ability of Canadians to plan and save, leaving them with substantially lower levels of assets to fund their retirements.” He cited a recent study by PricewaterhouseCoopers, which estimates that the ban would result in individual Canadian investors accumulating, on average, $240,000 less in retirement savings than those with access to advice.

“Investors are less likely to seek financial advice if they have to pay for it up front,” said Bourque, noting that most of us pay for advice through embedded fees. He pointed to evidence from the U.K. and the U.S. that shows that when fees are not embedded, the costs to average investors through advice channels increase. “Higher fees are an additional disincentive to seek advice,” he pointed out.

Referring to the regulatory discussions about the best interest standard of conduct, Bourque noted that: “We agree with all the regulators that the industry must put the interests of the investor ahead of the interests of the firm or advisor, where those interests may conflict. We also agree with the four regulators (from British Columbia, Alberta, Manitoba and Quebec) who have decided not to proceed with a statutory best interest standard because it is unclear what the proposed standard would add to the rules of conduct that advisors are already obliged to follow.”

Bourque noted that the current system is serving Canadians well and that we hold more investment funds as a percentage of total financial assets than any other country in the OECD. Acknowledging that there will always be opportunities for improvement, he emphasized that IFIC members are firmly committed to working with regulators to develop and implement solutions that serve investors’ interests.

“Preservation of access to the financial advice investors want, at a price they can afford, should be a litmus test for any regulatory intervention in the marketplace,” Bourque noted. “Options that fail to meet that test must only be considered with evidence of overwhelming public benefit.”

About IFIC

The Investment Funds Institute of Canada is the voice of Canada’s investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. By connecting Canada’s savers to Canada’s economy, our industry contributes significantly to Canadian economic growth and job creation. The organization is proud to have served Canada’s investment funds industry and its investors for more than 50 years.

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For more information:

Sara Clodman, Senior Manager, Public Affairs (sclodman@ific.ca │416-309-2317)