Proposed Regulatory Changes Enhance Opportunities for Independent Advice

Nov 26, 2019 3 min read

For many of the advisors we meet with, a primary reason to move to an Investment Counseling Model is to get out from under the burden of the overly restrictive and bureaucratic regimes of rules imposed on them by “compliance.” Many stakeholders we engage with feel that regulatory compliance rules are limiting their ability to structure their practice and provide investment solutions that best meet the needs of their clients. The IC model provides several benefits relative to IIROC constraints; including, the ability to manage client assets at the total portfolio level, more flexible customer service models, and the ability to put the client’s best interest first.

Yet, when advisors begin to explore the potential of setting up their own practice, they can be overwhelmed by the existing regulatory requirement to implement systems that mirror those of the large financial institutions. They have to ensure that they have stakeholders who are qualified to play certain roles like Chief Compliance Officer and who can build a fulsome regulatory regime. Historically, it has not been possible to outsource compliance responsibilities; and the thought of setting up and managing compliance can end the dream of going out on your own.

That is why the recent announcements are so important for advisors interested in going truly independent. The Ontario regulators have indicated that they recognize that opportunities exist to improve the current compliance structure and reduce barriers for newer firms. Earlier this month, the Ontario Securities Commission issued a report entitled “Reducing Regulatory Burden in Ontario’s Capital Market” in which they outline much-needed changes to their oversight of smaller investment firms; the report recognizes that the advisory and portfolio management business is evolving, and regulations haven’t kept pace.

Amongst the 107 recommendations intended to reduce bureaucratic hurdles are a number that will make it easier for advisors to set up shop independently to provide a better experience for their clients. These recommendations will make it easier to get registered and maintain this registration over time, including the creation of a new portfolio-manager-lite registration category. Flexibility in regulation reflects the changing landscape and the need for new models for advisors — more options help advisors establish their businesses while focus on providing quality advice to clients.

The most meaningful proposed amendment may be the ability for a single individual to be the Chief Compliance Officer for multiple registrants. Compliance consultancies should be able to take a more active role in providing regulatory oversight without the need for the firm to find a qualified CCO to sign off. This allows firms to get more professional and experienced compliance support from outsourced partners; without sacrificing accountability. This model which exists in other countries, including the US, has led to better choice for advisors, more experienced compliance support for new firms and more investment choice for consumers. These changes could enable the creation of a Regtech compliance platform that is fully integrated into the operations of the investment counsellor with the full support of a registered CCO and full reporting that will meet the OSC’s requirement and help the advisor achieve their dream of independence. If you are interested in discussing the regulation changes and implications for your business, contact us at and we can talk about how our platform can help you build the practice model that best fits your goals.

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