In June 2018, the Canadian Securities Administrators (CSA) proposed a set of reforms calling for more rigorous client best-interest regulations. This proposal was met with a strong response from the industry, with some provinces rejecting the proposal outright.
The CSA and regulators are now working together on a set of client focused reforms instead of a complete overhaul of current regulations. It’s not exactly clear how the proposed targeted reforms will change current practices, but they are sure to have a significant impact on wealth management firms, advisors and dealers.
There is no better time than now to leverage technology to automate and simplify compliance processes, thereby alleviating the burden of implementation for all future regulatory changes.
Client Focused Reforms Focus on Suitability, Raising the Bar for Client Best Interest
Under the proposed targeted reforms, advisors and dealers must make every effort to provide a transparent investment process and demonstrate that they are upholding their clients’ best interests at all times. Advisors must seek more detailed information from their clients to determine suitability, including their personal and financial situation, financial needs and goals, familiarity with investing, risk profile and investment time horizon. Increasingly stringent KYC, KYP and KYA requirements will make the process of collecting, sharing and updating information more involved.
Success with Client Best Interest Lies in Smart Portfolio Construction
Determining suitability shouldn’t be an onerous process. In fact, it should lie at the heart of advisor-client conversations and be the driving force of portfolio construction. The key is to use portfolio construction software with suitability automated in the process from start-to-finish. From onboarding and opening accounts to offering portfolio insights and analytics, the right platform will empower advisors and clients to work together effectively and holistically. This system should also manage risk and compliance in the back office, ensuring on-time and error-free statements and reports.
Product-Cost is at Stake While Fee for Service Grows
As product offering expands beyond mutual funds and investment opportunities such as ETFs and PTFs gain momentum, collecting fees for service has become challenging for advisors. The right technology can charge and collect these fees on one fully-integrated platform.
Once the client focused reforms are announced, we’ll be providing an in-depth look at how technology can support the seamless implementation and administration of these regulatory changes. Be among the first to receive this information. Sign up at the bottom of this page.
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