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Old 12-30-2016, 10:55 PM   #16
Slava
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Join Date: Dec 2006
Location: Calgary, Alberta
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Quote:
Originally Posted by heep223 View Post
The majority of advisors and brokers are not qualified to give financial advice. 95% of registrants in Canada are registered as salespeople. The entire industry is designed around the wrong incentives that put sales people interests ahead of investors. It shouldn't be such a huge step to have advisors actually disclose what they're being paid. When you're getting paid higher trailers on one product over another, that right there destroys any semblance of alignment. Combine that with the fact that advisors and brokers don't have a legal obligation to put their clients interests ahead of their own. There's a suitability standard but it's so loose and vague that most just ignore it.

You shouldn't be able to take a few CSI courses and immediately be able to call yourself a financial advisor. Our investment advice industry is a disaster tbh. I don't know why people aren't more pissed off about it in general but my guess is that most don't even know what questions to ask. It's become an industry filled with people trying to justify their own existence. Fascinating to watch really.

With the emergence of low cost indexing and self directed investing we are seeing a great democratization of the industry and it's only now just beginning. Now we're seeing the ugly truth about stock picking in highly efficient markets.
I agreed with basically everything that you said here, right up until the last paragraph. I would love nothing more than a much higher standard for people to hold themselves out as advisors. I do find it crazy that people have business cards that match mine despite my having the degree, CFP and 2/3 of the CFA (soon enough to be a charterholder...) But there isn't much I can do about that. I do think that there are significant issues, and you've at least brushed on them there.

The one major consideration is that good advisors do so much more than just invest for their clients. There is no question that this is a significant portion, but its far from the only thing. And I don't think that magically everyone will just start indexing and call it a day. If anything the waters are getting murkier with everyone and their dog offering "smart beta" solutions complete with great looking back-testing. Mutual fund companies aren't about to sit back and watch money flow away in Canada like it has in the US either; they're bringing out active ETFs with mutual fund equivalents.

I think that there is a significant place for good advisors. Clearly I have a bias there, because its my profession. But the truth is there are a lot of people who need help with these areas, and they need people who are qualified, honest and trustworthy.
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