The Modern Commission Theory holds that the actions of sales persons are directly driven by the ability to derive maximum revenue. Any suggestion that salespeople work in the interests of clients to mitigate risk and ensure suitability to naive at best and most likely is deceitful.
Infiltrators (Infil-traitors?): Groups that on the surface are there to help!
The Ombudsman Office of each of the major banks: The banks are not the nicest people to deal with at the best of times! But they are amongst the cleverest of the investment folks. Outwardly they have convinced many clients that they have an army of compliance folks just waiting to jump on any trade that is not a perfect match to the client’s needs and risk profile. In fact the compliance folks serve a much more important role in the banks. They are the canary in the coal mine. Complaints come in and are regularly assessed to see what damage they might do to the bank profits and bank reputation. If your claim is deemed to pose little risk you should not be surprised to get a quick note back to you saying your case has been reviewed and you signed and acknowledged the actions of your advisor/manager and thus have no claim. In fact, the compliance folks do a great job of training bank staff to ensure you signed the forms in such a fashion as to minimize bank risk. The problem is the forms are supposed to minimize your risk not the banks! Your complaint provides the bank with all the details they need to build a case against your claim. They have many experts and you are pretty much on your own.
Self Regulatory Bodies: The folks at the IDA and MFDA attempt to provide consumer education and basically a friendly face to anybody looking for information on investing. Enough said about self regulatory bodies in the past; suffice to say beware strangers offering candy. In the world of investments you need to ALWAYS follow the money trail. Who is paying for whom to do what to whom? SRO’s are member paid and industry funded to ensure the most egregious issues are dealt with before the industry gets a black eye. The day to day slashing and high sticking do not get any attention from these referees.
Nice Guys Finish Last: This group represents the folks with good ideas and a good heart, but they are entering a gun battle with only a dull knife to defend themselves.
F.A.I.R.: This group is relatively new and as stated in the past, I do not like their chances of making meaningful change without a regulatory cannon to threaten the powerbrokers in the industry. The approach of keeping a watchful eye on the industry can only drive change if FAIR can harness the media. The ability to harm reputations can get the attention of the industry; however, again we must follow the money. The media will support the ideals of FAIR but only up to the point it causes stress in the advertising budget when a big bank/investment dealer threatens to pull an advertising.
Media: Within the media, there are folks who know right from wrong (well, within the business section anyway). The journalists who challenge fund fees and hidden costs and lack of disclosure are brave souls indeed. They depend on the investment industry for the revenue that keeps the paper/TV going and keeps them employed. The net result has not been that they sell their souls for ad revenue (at least some of them do not), but their ability to criticize is limited to the generic issues. It is hard to point to a single firm like Investors Group and say “hey, your MERs are way too high”, but they can point to the industry as a whole and do in fact do so on occasion. Unfortunately many are cheerleaders for the industry and a consensus approach will never happen as long as the media battle for ad revenue.
The Ombudsman for Banking Services and Investments (OBSI): The bank is a powerful master in the Canadian investment scene. With their own Ombudsman offices being ineffective (even the politicians did not fall for that one), a Bank Ombudsman was set up to handle the investors not completely overwhelmed by the Bank’s in-house Ombudsman. Unfortunately you need to go through the bank sham to get a hearing with a truly impartial arbitrator for your complaint. How good are these guys......well RBC has stopped dealing with the Ombudsman for Banking because they found the Ombudsman was actually listening to complaints and making sound recommendations that cost the bank real money! Clearly that cannot be allowed to continue! So RBC took their ball and bat and set up their own cosy game. Good luck with those RBC complaints! The issue here is clear to see. The Ombudsman simply cannot force investment dealers to toe the line. As to why the bank would have an option to back out of this government driven approach is a question for another day. The OBSI clearly states they do not act as an advocate for investors....the scary thing is they might be as close as we get to a true impartial advocate. Of course, follow the money and they again are funded by participating firms.....does this conflict never end!
The Don Quixote’s: In this category I include all of us who knish our teeth at the investment shenanigans but who have neither media clout not enforcement powers. While we are too many to name, you only need go to a bank board meeting to see somebody stand up and challenge the status quo. Below is a short list of people who continue to tilt. I exclude myself from the list, not because I do not tilt at windmills, but compared to the folks below, I have accomplished nothing worthy of being included.
Larry Elford: http://www.investoradvocate.blogspot.com/
Joe Killoran: http://www.investorism.com/
Stan Buell: http://www.sipa.ca/
Ken Kivenko: http://www.canadianfundwatch.com/
FIGHT MONEY WITH MONEY: The Political Solution is "Money=Power=Money"
The key, if not yet obvious, is to follow the money! Politicians get elected by fanning the flames of issues to motivate voters, who in term vote for the politician and thus give them access to the money! Most voters are totally disillusioned by the investment world and how it operates.GREAT! That makes it a top of mind issue for politicians!
You’re “not likely in my lifetime” author....SOIS MIKE