I have seen an improvement in recent years in the readability of my investment statements. Previously, I barely gave them a second glance, not out of disinterest, but because the mental gymnastics involved in making sense of them was more than I could muster. I was not alone. A recent article reviews this common frustration, and looks at the ways in which financial services and disclosure can and are being improved, particularly for the aging and vulnerable investor. Here are three ways that things are changing:
1.Clarity – Making the font larger in written communications. Reducing jargon and limiting the fine print. In short, communicating in plain English.
2.Enhanced Enforcement – Several provinces are moving to enact legislation that will permit the Investment Industry Regulatory Organization of Canada (IIROC) to have its decisions registered with the courts, making them akin to civil judgments, which should improve the ability to collect fines. Reportedly, 30% or more of complaints to the IIROC involve the older investor, so enforcement in this area should have a tangible impact on this more vulnerable cohort.
3.Trusted Contact – The Ontario Securities Commission is proposing an added layer of communication that, if ultimately enacted, would require registrants to make efforts to obtain contact information for someone the client designates as a “trusted contact person.” This contact would not have attorney for property status or duties. However, if concerns arise about a client’s capacity, the advisor could reach out to that individual. This idea carries with it the added caveat that advisors would need to ensure that the “trusted contact” is truly communicating in the client’s best interest. Otherwise, the input received may be unhelpful. Even worse, the “trusted contact” could be the influencer behind the investor’s change in conduct or investment instructions. This rings true in some of the estate litigation cases we see involving attorneys for property that abuse the trust placed in them to administer the grantor’s assets in their best interest. So caution is a must.
Measures like the above may make headway in the goal of better protection for the aging population, which would likely have the added benefit of reducing litigation and/or negligence claims for advisors in this area.
Thanks for reading and have a great day,