Retired engineer Ken Kivenko has spent the past 15 years pushing securities regulators to do a better job of protecting investors from a profit-hungry financial industry.
Mr. Kivenko might be Canada’s most resolute investor advocate. He has facts and figures on every regulatory topic and he’s a near automatic call for journalists covering regulatory matters affecting everyday investors. This summer has been a busy time in the regulatory world, with several files in play. Taking it all in during a recent interview, Mr. Kivenko sounded bleak about the progress he and colleagues have made.
“There’s our educational efforts and helping people with their complaints,” he said. “But in terms of regulatory change, if we’re really honest with ourselves, I can’t really point to much.”
That’s on regulators, Mr. Kivenko, not on you and your posse. The polar ice caps will melt before we see meaningful reforms that put investors ahead of the investment industry’s imperative to keep increasing profits and dividends for shareholders.
It was just about one year ago that provincial securities regulators let the industry off the hook on two key reforms – one that would require investment advisers to work on a standard of what’s best for the client and the other that would stop the practice of hiding advice costs in the fees associated with investments, mainly mutual funds.
There was microprogress in one area – a decision by regulators to ban the outdated and thoroughly awful option for advisers to sell mutual funds that charge fees of as much as 7 per cent if the holder sells in the six or so years after buying. Then, the Ontario government blundered into the picture last September with an announcement that it did not support the ban on deferred-sales-charge mutual funds.
Ontario has sided with mutual fund salespeople against investors on this one. DSC funds are an affront to one of the natural laws of advising people about money: The client’s money belongs to the client and shouldn’t be held for ransom.
Ontario is doing something positive on investor protection, though. The province is working on regulations that, ideally, would professionalize financial planners and financial advisers by requiring them to have certain accreditations. You can currently use these titles without proper accreditation, which is certainly a weak spot in investor protection.
We’ll have to see Ontario’s new rules before deciding how useful they are. It’s possible to be too inclusive in setting rules on who can be a planner. There are several planning-related designations, but only two of them are the A Team. That would be those carrying the accreditation of certified financial planner (CFP) and registered financial planner (RFP).
Already, though, there’s a sense that Ontario’s financial planning rules are a consolation prize for not having a best interest standard and a ban on hiding advice fees in the cost of owning investment products. This is part of Mr. Kivenko’s feeling of disappointment about the lack of progress in protecting investors.
He worries that regulating titles isn’t as important as regulating the behaviour of advisers. “Best interest is a behaviour standard putting the client first,” he said. “The title is a different dimension.”
Mr. Kivenko got his start as an investor advocate after he served as executor for a deceased family member and found himself wondering why this person didn’t have as much money as expected in their estate. With his engineer’s eye, he analyzed the returns, fees and trading in this family member’s account and eventually reached a settlement deal with the investment firm involved.
There must be others in this same position, Mr. Kivenko thought at the time. And so there were. He estimates he’s talked to or directly helped more than 2,000 people over the years while working with other advocates such as Stan Buell of the Small Investor Protection Association.
Some in the regulatory world might see Mr. Kivenko as a bit of a pest because he’s so consistently engaged in the fight for better investor protection. That’s on them. Mr. Kivenko’s only doing what he does because we can’t really point to much in investor protection that has changed for the better in recent years.
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