Trailer commissions for mutual funds are here to stay. But the broader investor-protection issues of conflicts of interest, suitability, advisor proficiency and relationship disclosure aren't going away either, according to one of the two major policy papers released on June 21 by the Canadian Securities Administrators.
Had they decided to ban all embedded commissions, not just deferred sales charges and trailers paid to discount brokers, the regulators would have completely eliminated the conflict that arises when advice-givers are paid by fund companies, rather than directly by their clients.
Instead, the industry's referees are taking a broader approach to improving investor outcomes. In doing so, they recognize that conflicts of interest are about much more than trailer commissions.