In a world that has become increasingly complicated from both a global and a domestic economic perspective, the question remains: is there a true, measureable value attached to ongoing, professional financial advice? The answer is unreservedly YES. However, one must understand the difference between the “ghosts of financial advice past” and the professional financial advisor of today.
Financial advisors have gained a rather murky reputation over the years as being “policy hawkers.” The truth is, yes the industry has had some advisors of ill repute and no ethical conviction whatsoever. But owing to the many regulatory changes in the industry over the last decade, the net has been tightened quite rigorously around those advisors and the financial services industry as a whole.
The regulatory environment for financial services has changed considerably since the dawn of the Financial Advisory and Intermediary Services (“FAIS”) Act in 2002. Some of the latest additions require financial advisors, among other requirements, to complete what is referred to as regulatory examinations (“RE Exams”). These exams cover, for example, compliance with the FAIS Act, ethical conduct in the financial services industry, the services that financial advisors are licensed to provide, treating clients fairly and specific mandatory disclosures required from financial advisors. The regulatory examinations can be construed as the Financial Services Board’s (“FSB”) official board examinations for financial advisors. ALL advisors are obligated to write these exams regardless of which financial services they provide. All the representatives of Point 3 have completed and passed the required regulatory examinations.
Given the extensive legislative changes and the many still to come, we can say with confidence that the stereotype surrounding financial advisors is becoming something of the past. Financial services in the 21st century will be centred around adding value, building and maintaining trust, and partnering with clients on their journey to financial freedom.