Advisors do a great deal more than media gives them credit for. Regulators don’t understand the consequences of their decisions. Canadians would suffer if it wasn’t for the value of advice. These and many other views were expressed on the final day of the recently concluded 2010 Distributors’ Summit.
“The value of advice is important to Canadians, and without it they will suffer greatly,” said Chris Reynolds, co-founder and president of Investment Planning Counsel Inc.
Reynolds made a compelling case for that value, identifying three key areas of service that financial advice provides for Canadians.
First on the list was financial planning. He defined it as “telling you what you have to do to get to where you want to be.
“It is giving people that roadmap that they need to where they want to go,” he said.
Second, it was product choice. “Is the average consumer well equipped or have the financial literacy to make the right choice of the right vehicle at the right time?” he asked. “I will say no. That’s our job.”
He rounded off the list with the protective role advice provides against unguided investor strategies. He said investors tend to ignore fundamentals of successful investing and make irrational choices when left “to their own devices, without guidance or proper investment strategy.
“They will buy high and sell low, until they don’t have to worry about money any longer,” said Reynolds with tongue firmly in cheek.
He said those were very complex areas of investing, which advisors, not government, were equipped to help the consumer with.
“In fact, it’s so complex that our industry employs almost 300,000 people to give this advice to consumers across Canada,” said Reynolds. “That’s a lot of people whose lives depend on it.”
He said financial advice also served as an important tool to protect clients from unexpected events.
“Clients count on us to be there for them and to give them proper guidance at all the trigger points throughout their life.”
He said advisors perform a range of services for their clients that go well beyond financial engagement.
“The greatest value that we give our clients is what we call ‘soft issues’,” said Reynolds in a reference to support advisors extend to help clients get though unfortunate life events.
There is widespread ignorance about the role of an advisor, he said. “We provide a wide range of services. It’s easy to pigeonhole what an advisor does.”
The purchase of an investment product, he said, was simply a “by-product” of all these services.
He took more than a moment to take potshots at the mainstream media saying “they don’t have a clue (as to) what we do.”
“[The press suggests] we scammed people into buying mutual funds” with the “highest fee so we make the highest commission. And we drive nicer cars than they do.”
The media tended to downplay the role of an advisor, he said.
“The media has been going after our industry. Pointing fingers saying you don’t need advice,” said Reynolds. Buying and holding onto an ETF doesn’t work very well, he said, referring to the passive strategy often suggested by the mainstream press.
With some very blunt remarks, however, Reynolds made it clear it was the regulators he had reserved the sharpest criticism for.
“All this pension reform and all the Big Brother stuff they decide to shove down peoples’ throats; I don’t think they really and truly understand the far reaching consequences of these actions.”
He made no secret of what he thought of the new point of sale disclosure requirements either.
“Regulators are under the impression (that) if a client signs their name enough times they will be safe.” He said it was “higher educational standards” and “screening of people in the business” that made people safer not “filling up 500 pieces of paper.”
He said regulators were “trying to over-regulate” the one industry that has “the highest level of consumer satisfaction.”
“Government has decided that for some bizarre reason our industry is not regulated enough,” he said. “We shouldn’t need regulators, because we should be self regulated.”
(04/30/10)