Sunday, September 17, 2017

How the investment industry delays reform          

In The seven tactics unhealthy industries use to undermine public health policies

While many of the health industry techniques are slick, we still think the Canadian investment fund industry lobbyists are world class. Some examples of the methods used:

      ·         Hire senior regulatory staff promoting  reforms

·         Lobby Minister of Finance to come down on regulators

·         Attack independent empirical research

·         Attack the researcher that created the independent research

·         Fight  independent research with industry funded research

·         Have former regulators publicly condemn reforms

·         Divert attention towards better disclosure or financial literacy

·         Use fear mongering- Small advisors will be left to fend for themselves

·        State that retail Investors will be scared away if details on fees are fully disclosed 

·       Claim that regulatory reforms could cause a shortage of advisors

·       Boldly assert that trailer commissions do not skew recommendations- the Big  Lie

·       Claim that there is no convincing evidence that indexing has an advantage over active management

·        Argue that Targeted reforms are good enough - no need for a Best interests standard

·        Suggest that small investors need comprehensive guidance on taxation and estate planning

·       Imply that mutual fund  "advisors" ( registration is actually salesperson) provide holistic planning

·       State that advice is free with mutual funds

·       Support freedom of  payment scheme choice for unsophisticated investors

·       Use  gross dollars "saved" as a metric to justify advice

·       Claim that the value of  conflicted advice is over 3% of assets

·       Argue that  similar problems in other jurisdictions are different

·      Let media know who pays the advertising bills

·      Claim that greater advice integrity will make advice unaffordable for the mass market

·      Assert that rural communities will lose access to advice

·      Rip into robo advisors

·      Support political candidates that are industry-friendly

Let us know of any other approaches so we can keep the list up to date.

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