Overwork irritating Finance and Investments

Thus, in the survey, we asked the representatives to evaluate on a scale from 0 to 10, where 0 means “not difficult” and 10, “very difficult”, how difficult they find it to comply with the CARs. .

The median score obtained is 5 out of 10. This means that more than half of the 393 respondents to this question have an average degree of difficulty in respect of the various reforms that affect conflicts of interest, adaptability and knowledge of the product. as customer knowledge.

The dispersion of this degree of difficulty remains significant, because the standard deviation is 2.9 (the average is 4.74). In addition, it is common that, within the same company, there are as many advisers who find it very difficult (9 or 10) to comply with the CARs as others who do so easily (0 or 1).

Among the companies where advisers find it easier to comply with the reforms is Assante CI Wealth Management, which has an average difficulty of 3.9 out of 10, followed by Groupe Cloutier (4.1) and Investia (4.2 ). The Sun Life Financial Investment Tips (5,6) are those that, on average, have the most difficulty to fulfill.

Analyzing the reasons for these responses, we see that 21% of those surveyed believe that the RACs are a lot of work or create an administrative burden. They brought their share of new procedures and adjustment difficulties.

“There is always more paperwork. The administrative process is cumbersome,” said one respondent. “These are measures that I have already applied. What is cumbersome is the administrative process to build evidence that this process is applied. It takes a lot of time and resources that cannot be dedicated to properly serve their customers,” says another.

The proportion of respondents who believe that the RACs are a lot of work (21%) diverges from that of the respondents of the full-service brokerage sector, for which half had a similar perception. It should be said that investment dealers seem much more inclined to force advisers to update their client files every 12 months, while mutual fund dealers seem more likely to set such a standard at 36 months or a significant change in the client’s life.

However, some trends emerged from the comments collected. First, the level of preparation of compliance departments and also the training given to CPs on how to comply with CARs exerted an influence.

“You have to make an effort to adapt. Quadrus has implemented a tool that simplifies the way to comply,” said a respondent of this company. “IG was helpful in providing information,” said one IG respondent.

“Investia has created some great tools to help better integrate this into our practice,” says another representative. “I always take the time to get to know the client before making a recommendation. We have had great support from Investia to make sure we meet the requirements,” says a fourth.

To comply with the CARs, brokers have made various tools available to their representatives. Some have revised their forms. Other companies have designed a technological tool that allows advisers to compare the products they offer with those offered in the market, but not all. The importance of taking notes was also emphasized.

“It is not that difficult, but you must take the time to do it well and document your research. However, knowing what needs to be done and how to do it is not always clear, both from the side of the regulator and from our department of compliance,” said one respondent. “The difficulty lies in the time needed to formalize the notes. The knowledge of the product and the knowledge of the customer were recorded in a less rigorous and less complete way,” points out another.

Segmentation in view

Regulators go too far in their requirements and end up hurting small account holders, who risk being neglected by advisers, according to a segment of respondents.

“The RACs require a lot of note to take simple and repetitive transactions. We want to serve the small saver, but the obligations regarding the files push us to leave. The measures make the small wallets even less attractive”, summarizes a respondent.

“Compliance is more and more demanding. We are currently moving clients if they are not high net worth, otherwise it is too much to bear,” said another. It remains to be seen whether this trend towards segmentation will increase in the industry.

Many of the advisers who find it easy to comply with the CARs say they have already integrated the principles for years.

“They are in line with my personal values. I had already integrated several regulatory obligations,” notes a respondent. “Many reforms make sense, so it’s not hard to accept,” another said. “Although unnecessary documents are often required by compliance, the requirements to know the customer’s situation and the product offered are only basic requirements… They are completely justified and I have already gone beyond these requirements since I started my career “, adds a third. .

Some of them consider that they or their team have a good ability to adapt, which means that the integration of RAC is done well. And even among the latter, some believe that CARs arise as they struggle to adapt to the frenetic pace of regulatory change.

In addition, a significant segment of respondents questioned the true benefit to the customer, both among those who find it easy to comply with CARs and among those who find it difficult.

“There is an enormous amount of information being passed on to customers, who then feel overwhelmed,” observes one respondent. “Regulations change and, often, without worrying about the customer who, for his part, sees himself imposing elements of compliance. Sometimes it disturbs his intelligence. It requires more work from us that does not give anything more to the customer ” said another.

“We spend a lot of time on training and regulatory documentation, which has no added value in the eyes of my clients. There is much less time to take care of making a personalized financial plan,” said one respondent.

“The RACs themselves are not a problem. It is the fact that we have to go into details with clients when they do not want to know more than what is necessary. Explain the report of Sortino to anyone who does not know what a stock is is the perfect example,” says another respondent.

Scheduled cleaning

In addition, the RACs will stimulate a rationalization of the number of products offered. Some advisers are considering excluding funds from certain issuers or severely limiting the number of products they offer.

An adviser says that he had to justify the use of more than 300 products because he acquired a block of business that contained so many, when he usually offers only 60 different titles. The representative, who judges that the time is too short to establish a justification of so many funds, also risks considering the rationalization of his product line.

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