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Globe says OSC report sees deep flaw in fee structure

2019-07-30 07:00 ET - In the News

The Globe and Mail reports in its Tuesday edition that the quality of advice the average investor is getting from financial advisers calls into question the fee structure for that profession, says a new report from the Ontario Securities Commission. The Globe's Alexandra Posadzki writes that the report, published Monday by the nine-member investor advisory panel, says a "large proportion" of investors with small or medium-sized portfolios are not getting timely and relevant investment advice. Of the 3,083 Canadians surveyed, 49 per cent of those with portfolios worth $50,000 to $100,000 said their adviser spent less than an hour communicating with them during the past year. This despite the prevalence of so-called trailing commissions -- embedded fees that make up a portion of a fund's management expense ratio. Investor-rights advocates have long decried the use of embedded commissions, which are paid out to advisers as long as an investor holds a fund. The main concern is whether this creates a conflict of interest, with advisers driven more by the commissions than the best interests of their clients. Securities regulators plan to curtail trailing commissions, but stopped short of banning such fees entirely.

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