A recent article by Knut Rostad, president and founder of the U.S.-based The Institute for the Fiduciary Standard, notes that “[e]ssential criteria for the principles and practices of a profession of fiduciary advice can be divided between the “hard” requisites such as education, knowledge and experience, and the “soft,” including communication, character, honesty and transparency. While both sets of criteria are essential, advisers and their membership organizations place far greater emphasis on hard criteria.” FAIR Canada is concerned about the lack of emphasis on both soft and hard elements of a profession in Canada, noting that many firms fight tooth and nail against disclosure of even the most basic and obvious information investors need – particularly costs – and while advocating for a profession, fail to advocate for any review or reform of basic proficiency requirements.
Mr. Rostad points out the investor misconceptions about requirements (advisors hold themselves out as providing advice in clients’ best interests and investors understandably believe that this is the required standard of advice) and comments that “[w]hat is surprising is that, despite objections from consumer and adviser groups, many regulators tacitly accept this duplicity. Worse yet, the advisory profession either doesn’t know what to do or — and this would be even more amazing — isn’t concerned.”
FAIR Canada continues to call on regulators to impose a best interest duty in the interest of investor protection.