Fair Advice Now!

The Decline of an Excellent Profession

THE ADVISORS CLARITY INITIATIVE

This blog is launched as an initiative for financial advisors who have become interested in sharing viewpoints on developments within their dealership(s) in Canada.

In the past few years we have seen a growing emphasis on asset-gathering into larger dealerships through a series of mergers. This is usually justified by management as being the result of requirements for improved regulation and client service.

What has infact happend is that the ratio of advisors to clients has been drastically reduced, the remuneration of advisors has been cut back and the salaries and profits of the larger dealerships and their managers have soared.

There as been an extensive move to eliminate the advisor and replace him/her with technical account management systems, often at enormous cost. This has led to a deterioration of advisor working conditions as well as of access to services by clients.

Traditionally the independent financial sector consisted of a large number of small and medium-sized low capital intensity businesses which produced modest incomes for advisors and relatively good personal services to a modest number of clients with whom the advisor was able to maintain a congenial relationship. This was the knd of relationship decribed by Nick Murray his his famous book, "The Excellent Financial Advisor".

The competitive environment emerging after a series of reverses in the financial services industry from the Asian crises of the late 90s to the "tech crash" to the end of the "long bull" at the arrival or the new millenium and continuing with the terrorist threat and the decline of the U.S dollar has led some of the larger players in the industry to close in on and buy out the small independent advisor sector.

This has been led by larger investment houses incorporating mutual fund businesses, gradually eroding the independent advice sector to a skelton of its former self. Self-regulatory organizations such as the IDA and the MFDA have used compliance requirements and regulation
as a tool to achieve this end with little intervention from public watchdogs like the OSC or investor organizations.

The intermediaries between the dealerships and the investing public, the advisors, have been poorly organized and equipped to deal with these developments. This is regrettable since the interests of investors and advisors are so closely aligned.

This blog is intended as a forum to provide independent advisors an opportunity to exchange views on these developments in order to become better informed in efforts to enhance their own professional competence as providers of services to members of the public who have placed their financial security in our hands.

To this end, your comments as an independent advisor or member of the investing public, are welcomed.

Join Blogspot to enter your views or make quick comments in the guestbook where you can also get in touch to join The Advisors' Clarity Initiative.

posted by Thunderer @ 2:23 PM