If the provincial regulators needed more impetus for getting rid of embedded mutual fund commissions, known as trailers, they got it recently.

Last week in an article in the Globe and Mail, Clare O'Hare revealed that 83% of funds held in discount brokerage accounts pay a trailer free. As a reminder, trailers are meant to pay for on-going advice. Discount brokers aren't licensed to provide advice to clients. In the last year, this disconnect has been a concern of both the provincial regulators and IIROC, the Investment Industry Regulatory Organization of Canada, and yet, little progress has been made.

And early in the year, the British Columbia Securities Commission published results of a survey that showed "28 per cent [of B.C. investors] do not know how their advisor is paid and 36 per cent are not familiar with the types of fees they pay for the investment products they own". This is despite the commissions' push to improve client reporting through their CRM2 initiative (Client Reporting Model – phase 2).

I'm updating you on this topic because a small minority of wealth management firms are still fighting tooth and nail to stop the banning of trailers. They argue that clients should have an option as to how they pay for services. I think the lack of effort by dealers to (1) rebate trailer fees to clients who aren't receiving advice and (2) support the regulators' leadership on client reporting (see our comments on this topic here) reveals that the only ones who want payment options are the investment dealers.

The wealth management industry is already highly regulated (ask Elaine, our CFO, about it), but the refusal by a majority of providers (not all) to lift a finger on behalf of their clients' interests and understanding is appalling. Company policies are too often designed to favour the advisor and the company's revenue line, with little regard for what's good for the client.

It's time to let investors see clearly what they're paying and what they're getting for it. The trailer commission subterfuge is an embarrassment and needs to come to an end.