Controversy over the proposed Point of Sale compliance obligations on mutual funds has supporters and critics at odds. But one thing is clear, based on three Advisor.ca polls, the majority of readers are not siding with the regulators.
In an Advisor.ca poll published on April 16, a decisive 85% of respondents agreed the proposed rules were a "waste of time and money." Only 9% thought they were "necessary to protect everyone," and 6% hadn’t made up their minds yet about whether they would support the changes or not.
An overwhelming 82% of readers thought the rules would give other products an unfair advantage, according to results of a poll posted on April 19. Only 9% disagreed with that statement and 6% were undecided.
In a poll to determine the best way to educate clients about mutual funds, 28% believed commercials and advertisements were the way to go, while 14% backed the POS rules. Approximately 26% thought the best approach was a combination of both but 32% put the responsibility of product education right on the shoulders of the clients themselves.
The compliance obligations would require advisors to keep records (written notes, recordings) to prove they explained the details of a mutual fund to their clients at the Point of Sale.
Some see the policy as an expensive paper chase that would bog down business. And many say the information would just be duplicated because the prospectus already contains all of the details clients need to know.
"How much do you expect a doctor to explain to you about the intricacies of whatever the diagnosis is, or a lawyer to explain intricacies about your legal situation so you can make the decision?" Larry Boyce, senior vice-president, Sutton Boyce Gilkes Regulatory Consulting Group Inc (SBG) told Advisor.ca. "How many investors really want to know something and how many just want to rely on the advisor to advise them properly?"
Investor advocates and those who welcome the changes believe clients should be protected and fully informed about the products they are buying.
"It is our contention that financial literacy is important for investors to make informed investment decisions, and providing simple, easy-to-understand information would be a step in the right direction," said Ken Hawkins, chief investment strategist at Weigh House, in an interview with Advisor.ca.