Stay informed so you can better manage the impact of new regulations on your business.
The regulators were active in 2018, proposing amendments designed to enhance your clients’ relationship with you, eliminate deferred sales charges (DSCs) and trailing commissions, and ensure the transparency of investment fund costs. In addition, the Ontario government has been exploring ways to regulate the use of the term “financial planner.”
Each of these changes may have an effect on your practice, which is why it’s so important to fully understand them. Here’s a summary of what’s in flux, along with Manulife’s perspective on each issue.
Building better client relationships
Several reforms proposed for National Instrument 31-103 focus on improving the service clients receive and, therefore, their relationship with their advisor. They include measures that, if implemented, will:
Manulife has expressed its concerns about some of these proposed amendments to the Canadian Securities Administrators. In our commentary, for example, we highlighted the added value of referral arrangements and explained that limiting referral fees to non-registrants could have the unintended effect of reducing investor choice and creating an inferior investor experience.
Addressing what you can charge and what you must disclose
Proposed amendments to National Instrument 81-105 will:
Cost transparency is also part of the Client Relationship Model Stage 2 (CRM 2), a securities-driven initiative that requires dealers to disclose the dollar amount a client pays in advisor and dealer service fees every year. The insurance industry is expected to adopt full-cost-disclosure requirements by 2021 – something Manulife believes is essential so the mutual fund and insurance industries are in step. Moving simultaneously and consistently will reduce client confusion and maintain a level playing field across industries and product lines.
Regulating the use of “financial planner”
In Ontario, the government is considering three ways to help consumers navigate an environment in which titles often don’t correlate to qualifications or expertise:
Manulife supports the development of a regulatory framework to restrict and regulate the use of the “financial planner” title, and recommends that the Ontario Ministry of Finance leverage the existing regulatory regime and focus on addressing gaps presented by non-licensed, stand-alone advisors.
We’re here to support you
As you and your practice adapt to the shifting regulatory environment, we at Manulife are here to provide information and guidance. Our responses to proposed amendments always consider the impact on advisors and their clients, and we aim to keep you in the loop as changes are proposed, debated and implemented. That way, you’re in the best position to apply new rules with a minimum of disruption to your practice and client relationships. For more information about these specific changes, visit https://www.osc.gov.on.ca/.