Advocis proposal sparks lively debate

(August 23, 2004) It’s not a new proposal, but Advocis’ position that financial advisors should be regulated by a new independent professional body has stirred up fresh debate in Advisor.ca’s Talvest Town Hall. Advocis president Steve Howard provided details of the Advocis model before an Ontario government committee last week.

According to Howard, securities regulators would continue to regulate the distribution of financial products, while the new body would set standards for advice, such as the requirement to hold a professional designation and to adhere to codes of conduct and practice standards.

Calling Advocis a “self-serving glorified sales association,” an advisor identified as “concerned” fired the first salvo in Advisor.ca’s online forum, worrying that under the Advocis plan, all advisors would be forced to join Advocis and obtain a designation through the association. “This industry does not need Advocis as a regulator,” the advisor added.

But several advisors quickly jumped to the defence of Advocis. “I like Advocis’ proposal,” wrote Kevin Lamour. “The government doesn’t understand our business or our relationship with our clients,” added an unidentified advisor. “We are no longer in the product sales business but the advice-giving business. That is why advisors need input into the regulations to make it fair for all concerned.”

Lawrence Geller says he believes the best alternative would be for the various advisor associations to join together and, “with a common voice, go to the various provincial governments and regulators to ask them to create the self-regulatory organization that would regulate us. In the absence of that, it seems that Advocis is pursuing the only possible alternative.”

Former Advocis chair Brian Mallard joined the debate, arguing that Advocis is simply putting forth the proposition that the advisor adds value to the consumer, insurance and mutual fund industries. “If this role is not protected and preserved, we as Canadians will be the poorer for it,” Mallard wrote.

Another critical advisor identified as “duck” accused Advocis of having a hidden agenda, a charge vehemently denied by Mallard, who said it would be “virtually impossible” to formulate a conspiracy and keep it secret, considering the Advocis structure, which consists of 14 independent directors and 50 chapters across the country serving 14,000 members.

“Actually, the Advocis agenda is quite clear and very simple; to protect and promote the professional, independent-minded financial advisor,” Mallard added. “Why would there be a need for a secret agenda when this one is so straightforward and effective?”

What do you think of the Advocis proposal? Join this ongoing debate in the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com