It’s been more than one year since the U.K. and Australia implemented regulatory changes for advisors, including banning embedded commissions and acting in the best interest of clients.

And the changes have been positive, say experts at IFIC’s Annual Leadership Conference on October 1.

Read: Fee-for-advice model lacks transparency: IFIC

The U.K., which adopted a minimum education requirement, had a 20% drop in the number of registered advisors, says Julie Patterson, director, Investment Management Regulatory Change KPMG (U.K.). And that meant the quality of advice has improved.

A big “chunk of that 20% were people who should not have been [in the industry] in the first place, so they cleared out,” explains Patterson. Also, older advisors thought, “I don’t want to take these exams.” So many have stayed on as mentors, but don’t provide advice.

“Every advisor is now minimum qualified. If you look at the numbers [dropping], you say, ‘That’s a worry.’ But if you look at the quality, you can argue the number has actually gone up.”

Read: Don’t ban commissions, says Advocis

John Brogden, CEO, Financial Services Council (Australia), agrees. “As we adopt minimum education requirements, I think there’ll be a lot of old dogs who don’t want to learn new tricks.”

The country went through a period where the “reportage of financial advice was the lowest it’s ever been.” That’s after advisors at Australia’s largest bank, Commonwealth Bank, were caught forging client signatures, he says, and Macquarie Australia allegedly gave new advisors answers to exams. So the country introduced the Future of Financial Advice initiative, and the industry is making a comeback.

But there is one challenge with the best interest duty, adds Brogden: advisors at bank branches.

“They could literally recommend another bank product to [the client] because that’s in [his] best interest,” he says. “So that’s where this whole best interest duty smashes the control of advice among the distribution channel. The regulator could say, ‘The advisor recommended XYZ product of XYZ bank [where they work.]’ That’s not [necessarily] in the best interest.’ ”

Read: Most investors support embedded fee model

Brogden predicts “the financial system might recommend that no product manufacturer or product provider can own an advice or distribution business.”

Meanwhile, in the U.S., regulators haven’t proposed banning commissions yet, notes Bob Grohowski, senior counsel, Securities Regulation, Investment Company Institute (U.S.). But they are focused on disclosure, and more advisors are moving to fee-based.

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We have a great system in Canada and who said Australia and GB have correct formula ? Our education standards are very good and regulatory bodies are taking care of the members and industry . Financial industry is in trouble when commission is a bad word .

Friday, October 10 @ 5:17 pm //////

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