27 September 2018 13:30
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A group of six mutual fund dealers in québec application to the various provincial political parties to clarify their position on the proposal of the canadian securities administrators (CSA) to eliminate the deferred acquisition costs, as announced on 13 September. They argue that taking this avenue will reduce the accessibility of advice.
The grouping formed ofExcel Private Management, Groupe Cloutier Investments, Mérici Services Financiers, Mica Capital, Multi Courtage Capital and Whitehaven Securities has sent a letter to the spokespersons responsible for the Finances of each party.
The echo of the Ontario
Their request echoes the output to the minister of Finance of Ontario, Vic Fideli, which occurred on the day of the announcement of the CSA. The collection tells that the minister is distanced from the position of the CSA. Mr. Fideli said that if the changes proposed by the CSA and the OSC are made, they will eliminate a mode of payment for the purchase of mutual fund that allows families and investors ontarians to conserve. “Our government does not agree with this proposal in its current form “, he added.
These statements re-opened the debate, considers the grouping of brokers in quebec. “The main political actors in Quebec have a vested interest in ensuring that the population is aware of their position on the issue and the concerns raised by the ministry of Ontario’s capital,” write the co-signers.
They add that several industry stakeholders have already argued, as Mr. Fideli, that eliminate the funds in the deferred acquisition costs will limit access to advice for smaller investors and the access to the profession for the next generation, especially in the independent brokerage.
“Since the declaration of the minister of Finance of ontario, the consultation of thefinancial markets Authority continues to disregard the position of the Ontario. To have intelligent exchange with the regulator and the government, we want to have a positioning of the provincial party, and the new minister of Finance when he will be elected. We will act differently if there is still space for a compromise “, said in an interview in the Journal of insurance, Maxime Gauthier, chief compliance officer and mutual fund representative of Mérici Services Financiers.
Frame more closely
Law firms are signatories call of a single voice, in a closer supervision of the use of funds for deferred acquisition costs. “Other alternatives could be considered which could very well respond to the concerns of the CSA in connection with the fund to deferred acquisition costs, while avoiding the significant adverse impact of a total ban “, they write.
“Rather than withdraw the acquisition costs deferred to the tool box of the advisors, it is necessary to recognize their usefulness, like that of a saw that you would want to ban to avoid people from getting hurt. There must be a stricter and tags a lot more clear, ” said Mr. Gauthier.
It proposes to determine the situations where it is appropriate to sell a fund with a deferred sales charge, considering for example the schedule of the client, or by dictating what is reasonable as compensation. “To impose costs on acquisitions deferred for an account of one million dollars would be indecent, but not for an account of $ 1,000. “
To live rather than survive
President of Groupe financier Multi Courtage, Guy Duhaime recalls that the formula of the deferred acquisition costs allows you to serve clients with assets is limited and the young people in the accumulation phase. He opts for the funds at a reduced fee. Carried forward for only three years, they allow these investors to receive advice, and the advisor to receive a decent compensation (between 2 % and 3 %, he says).
“The big savings accounts are all fee-based. The advisor who has several wins of his life. But the majority of advisors tend to have accounts of 40 000 or 50 000 $, and some $ 100,000 or $ 200,000. In addition, people do not have all the means to pay for the services of a financial planner to $ 150 an hour, ” says Dr. Duhaime. He relates the case of a client who wants to transfer an account of $ 18,000 to his cabinet. Without the fee, it is impossible to make such an encounter of three hours and all the paperwork and administration that will ensue, ” said Mr. Duhaime.
For Maxime Gauthier, this is a question of ensuring decent remuneration to advisors is intimately linked to that of succession. “Among the reasons for our approach, there is the accessibility to the council. The advisor will receive a $ 10 fee for a customer who starts saving $ 1,000 per year. Who is going to do that ? “Eliminate the deferred acquisition costs will deprive the customers of modest advice, he adds, or will force them to move towards the banks, with a choice of restricted products and a high turnover rate of advisers. “We believe that this will hurt greatly in the recruitment of new advisors, by depriving them of a decent income in their first years of practice.
Mr. Gauthier is also afraid of the risks of arbitration regulation. “If the advisor needs a salary to live on, and that the charges are allowed on the segregated funds, but not on mutual funds, what will happen ? The regulation should never have the effect of directing towards a product rather than another,” he says.
For the following
Mérici will soon begin work on a memorandum that it intends to introduce in the framework of the consultation later this autumn. Its chief compliance officer hopes to be fixed soon. “We could not miss the context of this campaign speaks to the various parties and expect to know their position. Having worked briefly as a political attaché, I do not expect, however, not to have answers now, but rather in a few weeks, when the elect will begin their work.”
Guy Duhaime, for its part, revealed that two of the parties had sought clarification of the consolidation, without saying which.