The Canadian Securities Administrators (CSA) has focused on fiduciary duty to ensure dealers and their advisors act in the best interests of their client. Acting in a client’s best interest means ensuring client interests are paramount; conflicts of interest are avoided; clients are not exploited; clients are provided with full disclosure; and services are performed reasonably prudently.
In my letter to the editor appearing in the October 2015 edition of Investment Executive, I noted that Canada’s investment industry fully supports a high standard of conduct for retail advisors. Industry efforts over the past four years to consult closely with regulators and implement an effective Client Relationship Model (CRM) framework in Canada testify to this commitment.
However, I stressed that it is important to make the distinction between a high standard of professional care and a formal fiduciary standard, or a standard mistaken for a formal fiduciary standard, as in a “best interest” standard. A fiduciary-like standard and what may look like a “one-size-fits-all approach” may force unnecessary changes to the availability of current business models—to the disadvantage of retail clients.
The right answer, I note in my letter, is to offer clients who want a full suite of retail products and services, including advisory accounts, at the highest professional standard of care reasonably possible, without compromising the availability of investment advice to Canadians who seek it and wish to benefit from it.
Read more in my letter to the editor here.