Let’s boil this down quickly – if you’re a Canadian and you do what everyone else does with your savings and investments you will never get ahead. As I explain why let’s look at what is happening in the USA. The USA is moving to execute a fiduciary duty on its financial advisors that includes a “conflict of interest” rule. The “conflict of interest” referred to is the fact that any financial advisor that is not fee-only receives a commission on what they advise their clients to do. In Canada, this is most advisors encountered by Canadians.
As Barrie McKenna writes, commissions put enormous pressure on the advisor to make sales volume targets and even discovers that because of this “…[j]ust to break even, investors typically must generate annual returns of 5 to 8 per cent to cover fees, commissions, trading costs and inflation…” an estimate from Victor Therrien, a mutual fund industry veteran and former executive vice-president of Brandes Investment Partners.
On a similar “conflict of interest” rule move in Canada there is silence. Indeed David Di Paolo and Kara Beitel, partners of Borden Ladner Gervais LLP counsel against it saying “A blanket imposition of a fiduciary standard would ignore the realities of many advisor-client relationships.” In their article they almost completely ignore the “conflict of interest” elephant in the room.
Consumers Union, maker of Consumer Reports magazine, has been advocating for such a rule for some time and further educates us by explaining what a Fiduciary Rule means: http://www.consumerreports.org/money/what-the-heck-is-a-fiduciary/
If you don’t want to wait for this issue to resolve in the public good’s favor, I write about a simple method to grow your investments here: https://textor.ca/2016/08/avoiding-the-doomed-retirement-feeling-how-to-correct-your-investments-in-your-favor/