"Nearly 1/3 Of Investors Said Their Financial Adviser Didn't Explain Fees At All"

Sometimes I am just blown away at how little progress there has been in the way of improving financial literacy and the way financial institutions encourage investing, while at the same time finding ways to mislead a good portion of the investing public about what they are paying for and how it is paid. 

If you can, read this recent Globe and Mail article: "Canadians still in the dark about investment fees despite major changes in disclosures".

"A 2017 study by Credo Consulting Inc. found that 62% of investors still think that they do not pay for the financial advice they receive".

If you can, friends, please forward this story or this blog on to someone you may know who may not be as well-informed. I try to keep those of you who allow me your precious time, as best as my limited writing skills will allow, to open up the possibility that there is more than meets the eye in the world of financial advice.  Or perhaps send them to follow me on twitter @jstomenson as I do my part to encourage whoever I can reach to go and ask the tough questions of those who are providing financial advice.

I have worked for large banks and financial institutions at a high enough level to fully understand who works for whom. I asked the tough questions of senior management: "Who do you work for? The client or the shareholders?

Without hesitation, I was told it was the shareholders.

So what about the client?

The client is the source of revenue that powers earnings and profitability the funnels back to the shareholders in dividends and improved share prices.

The best way to improve earnings is to increase revenues and lower costs. What are the costs? In a wealth management division, client service is a cost. So how best to cut those costs? Reduce the service factor. So that is how the financial services business is evolving: bring in the clients, but limit their personal service (i.e. robo-advice).

I met with a prospective client last week: a very busy, career-driven, thirty-something (I would say "millenniel", much more communication-savy than me) who was blown away that I would come to her office to meet!

Service is never free. The regulators have made a lukewarm attempt to force advisors to show their clients how they are paid.

The evidence presented in the Globe and Mail article (above) tells me that there is still a great deal of naivete in the investing world (at the client level) and that the efforts to bring clarity to it has obviously not worked (so far). Furthermore, the conflict of interest of mutual fund companies paying commissions to advisors who sell their mutual funds has still not been resolved.

I need not tell you all that we started High Rock Private Client to bring clarity and transparency (above the regulatory requirement) to those who paid attention, but the conversation needs to reach far more, less-informed folks. I and they need your help.