Advocis Symposium 2009 - Paul Mahon - Pt.3

The CCIRR's focus on needs-based planning and selling is to promote quality of advice and product suitability. Sounds a lot like the UK FSA's rules. This guideline approach can only work though if all stakeholders work together to implement these policies and practices that are essentially rules for our industry. No matter what, I believe rules are required. We as a group have to decide whether we want to have the industry create those rules collectively or whether we want to wait for a regulator to put those rules into play. I think that is the clear challenge for us as an industry. All of these things—education, compliance, disclosure—are required. I challenge anyone to say that that is not important to a client, it's not important to your practice, it's not important to our industry. So the question is, who do you want to have the rules put in place?

So the question is—and by the way, sorry I didn't advance the slide, that's what I was just talking about for the last couple of minutes—moves us on to how do we sustain a principles-based system. My first comment would be that our Canadian principles-based guidelines must remain aligned with other jurisdictions' guidelines. So it's very important to look overseas, it's very important to look to Australia, it's important to look to the US and see what's going on. Our regulators will be looking to those jurisdictions, so we as a body working together better be looking at those jurisdictions. The key is effective implementation and commitment to practices and processes that focus on the client's best interest. To achieve this, we must remain committed to advisor development and support to ensure that financial security advice is steeped in professionalism. Number one: transparency. Full transparency, compliance, and training. And I heard a lot about training, and I go back to I believe that product training is important, I believe process training is important, but remember sales training, salesmanship, salespersonship—my apologies—is so critically important to our industry in terms of meeting people's financial security needs. These need to be our rules, not a regulator's rules. We need to make sure they achieve the desired objectives. There's two approaches we could take to this. There was lots of discussion earlier today about a self-regulated organization, and that is an approach. Consider the accounting profession. I think I heard some comments about you know accountants, they're all you know they're salary based and we should go to salary based. I would challenge you to say that accountants and lawyers are salary based. If you've got a salaried base accountant or lawyer, you should probably get a new one right now. So we can go the SRO approach or we can do it through a partnership. And I would challenge us before we consider the complexity of moving to an SRO model—because I will tell you there's significant complexity in that, and I would support it but it takes a lot of commitment—think clearly about whether a partnership can get us there. And when I talk about a partnership, I'm talking about a partnership of regulators, insurers, and suppliers like MGAs. We all need to figure out where we fit in. I was not in the MGA session earlier today, but I understand there was lots of discussion about what is the role of the supplier as the MGA, what is the role of the manufacturer, what is the role of the advisor as you think about compliance, and then we need to think about relying on associations like Advocis because Advocis is at the core of what our beliefs and our values are, and we need to think very clearly about this. So my final comment would be: do it the way we will, whether it's as an SRO or through a strong partnership, but I know our industry is up to the task. The only way we will make it happen though is not talking to groups like this, it's engaging the broader industry. You know, one of the things I was thinking about here as I sat here and listened to the last speakers was that in some ways I was preaching to the converted. The passion in this room about the importance of our industry and what we do is outstanding, it's heartening, and it provides me with a lot of confidence. But it will only happen to the extent that we can reach out to the broader distribution organizations in Canada and engage them. So the last challenge I leave with you is to reach out to those broader distributors in Canada, engage them in this, to create the same level of passion. Thank you.

Uh, I don't know if I have time for questions because theoretically I'm four minutes overtime, but I did go a little quicker, I cut out some stuff. Are there any questions? And I'd be happier if there's none too.

Uh, I would echo some of the previous comments made that I think professionalism and training and development of people is critically important. So I would be in full support of university programs to create both the credibility and the knowledge and the awareness of insurance, as much as it would be for the education and development. My concern would be though that if we left it just at that, because bringing four lawyers, for uh, people educated in finance, for accountants to an insurance practice and then saying we're done would not mean that we're done. Consider the success rate of people no matter what their education coming into this industry. It takes mentoring, it takes sales development. And no matter what, if you consider any commission sales practice in the world—we've studied this a fair bit, whether it's financial services, whether it's pharmaceuticals, whether it's hard goods—the success rate of people in commission based sales at best is probably about forty percent. So four out of ten in the world best practices in terms of commissioned. So unless we're going to go to a salaried base model—and it would be interesting to do a, we could I guess we could all do a vote here today deciding if we're going to go to salary based—but unless we're going to go to a salaried base... what's that? Okay, there you go. It might be different than you make, Terry. But unless, you know, we can also nail the issue of training and development of people in salesmanship, I think the university education is the starting point, but it still requires significant growth and development in people. And I worry very much about the color of the hair in the room, as I might put it—my hair as well—in terms of you know people are in their late 40s, 50s, and 60s. And my response to that would be as an industry, there are companies who are still bringing new blood into the industry. There's some outstanding MGAs who are investing time and energy. We see the Seneca College model. We need to actually nationalize that through both education, but we also need to figure out what are some of the core ways we can help MGAs, brokers, and insurance companies who don't have exclusive distribution train and develop people in salesmanship. And I would say the biggest opportunity would be your succession strategies and how people are going to help you with your succession strategies. Any other questions? Thank you very much.