Advisors looking to get some clients into DSCs before CRM2 might want to rethink that strategy, with compliance departments now taking a closer look at transactions involving seniors
An Ontario advisor recently recommended to an elderly client that they invest almost 50% of their portfolio in a single DSC fund sparking immediate protestations from readers who believe there are no circumstances in which DSCs are appropriate over the age of 60.
“DSC for age 75+? No way for any fund,” said one seasoned advisor in an email to WP. “We get a call from compliance if we do DSC for age 60+.”
It seems that even if advisors wanted to put their elderly clients into DSCs the regulators have gone to great lengths to ensure that dealers are already watching any such activity by advisors.
Still, some other advisors feel DSCs more generally are a moot point, representing only 14% of the $1.2 trillion in mutual funds in Canada. Still according to IFIC, DSCs are being disproportionately used by younger advisors, looking to get paid upfront in order to jumpstart their careers.
Another possibility brought forth by advisors is the idea that compliance is simply following the rules set forth by regulators and not necessarily that a dealer’s paying specific attention to elderly clients. In the eyes of some, this has become a social issue rather than a regulatory one.
“I can’t speak for the dealers but I know there is political pressure coming down from regulators because we have annual conferences and it’s been raised two or three years in a row now,” Jack Di Nardo, a financial advisor with Wealthworks Financial in Woodbridge, told WP. “The heat will continue to be built on that by the regulators. The dealers will all comply. It’s not like they’ll have an opinion. They’re [regulators] just going to push us [advisors and dealers] into bankruptcy.”
That might be a harsh way of looking at the issue of compliance, but Di Nardo’s concerned about the regulators’ perceived desire to turn advisors into social workers.
“The push by the regulators to have advisors assess the mental competency of clients and to be held accountable as an advisor financially for any subsequent problems or defrauding by families where there’s been financial abuse is a form of social policy work that is beyond an advisor’s skill and competence,” said Di Nardo. “That’s a legal issue, it’s a moral issue, it’s a social issue, but it’s not a financial issue.”
“DSC for age 75+? No way for any fund,” said one seasoned advisor in an email to WP. “We get a call from compliance if we do DSC for age 60+.”
It seems that even if advisors wanted to put their elderly clients into DSCs the regulators have gone to great lengths to ensure that dealers are already watching any such activity by advisors.
Still, some other advisors feel DSCs more generally are a moot point, representing only 14% of the $1.2 trillion in mutual funds in Canada. Still according to IFIC, DSCs are being disproportionately used by younger advisors, looking to get paid upfront in order to jumpstart their careers.
Another possibility brought forth by advisors is the idea that compliance is simply following the rules set forth by regulators and not necessarily that a dealer’s paying specific attention to elderly clients. In the eyes of some, this has become a social issue rather than a regulatory one.
“I can’t speak for the dealers but I know there is political pressure coming down from regulators because we have annual conferences and it’s been raised two or three years in a row now,” Jack Di Nardo, a financial advisor with Wealthworks Financial in Woodbridge, told WP. “The heat will continue to be built on that by the regulators. The dealers will all comply. It’s not like they’ll have an opinion. They’re [regulators] just going to push us [advisors and dealers] into bankruptcy.”
That might be a harsh way of looking at the issue of compliance, but Di Nardo’s concerned about the regulators’ perceived desire to turn advisors into social workers.
“The push by the regulators to have advisors assess the mental competency of clients and to be held accountable as an advisor financially for any subsequent problems or defrauding by families where there’s been financial abuse is a form of social policy work that is beyond an advisor’s skill and competence,” said Di Nardo. “That’s a legal issue, it’s a moral issue, it’s a social issue, but it’s not a financial issue.”
