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One of the ways investment advisers earn their fees is to act as a client’s own personal Dr. No.

That cool new way to invest in real estate? No – you already have enough real estate exposure in your life. Bond replacements that offer better returns? No – they won’t do a thing to protect your portfolio when stocks crash. Maybe an exchange-traded fund investing in metaverse stocks? No – just no.

It appears that advisers are not saying no often enough, though. By the end of this year, they must follow “know your product,” or KYP, rules designed to ensure they and their employers think harder about the products used in client portfolios.

The timing is ideal. We are reaching a crescendo of new product introductions targeting every possible hot trend in investing right. Most of these trends are dead ends. Anything that can be done to slow investors down in jumping aboard should be welcomed.

It’s actually kind of a shocker that KYP rules are even an issue. Have you heard of transportation authorities telling airline pilots, know your aircraft? Accountants being told, know your tax code? The answer, naturally, is no. Professionals generally don’t need that prompt.

But investment advice is different. There’s a blurring of lines in some cases where professional advice is subverted by an emphasis on selling investing products and portfolio management services. The very idea of KYP tells us that too many inappropriate investments are getting into client portfolios.

There are multiple reasons why this might happen – advisers selling products that pay high fees and commissions, advisers finding it easier to play Dr. Yes for a demanding client, or pure adviser laziness and ignorance. Regardless, the obvious implication of KYP rules is that not enough advisers know their product.

Think of KYP as a complement to existing “know your client” rules, which focus on an individual’s personal situation. This means looking at how old a client is, how they deal with stock market risk and whether they want to grow their money, preserve it or use it to generate investment income.

KYP is designed to focus on the specific details of products that are considered for clients, including cost. No, this isn’t a commandment to sell only the lowest-cost products. It’s only sometimes advisable to buy an investing product simply because it’s the cheapest. For example, with exchange-traded funds tracking the big stock and bond indexes.

On the other hand, it’s almost always advisable to avoid an investing product because it has a notably high cost. Big fees are an instant turn-off.

KYP also means looking at the structure and complexity of a product, and risk that it could lose some or all of a client’s money. Other points for advisers to consider include the background and track record of the people behind a particular product.

This brings us back to the Dr. No role, which some advisers are definitely filling these days. I wrote something on advisers and cryptocurrencies last March – the headline was, Why Your Investment Adviser Hates Bitcoin.

But the sheer volume of new product launches these days suggests some advisers are acting more like turnstiles than gatekeepers. There are plenty of do-it-yourselfers buying new products these days, but the real action if your company sells investment products is in getting advisers on board. Most investors have no idea about the teams of wholesalers that fund companies use to pitch their products to advisers.

KYP is a good thing for everyone because it will result in portfolios for clients being constructed with greater care. Already, though, an unintended consequence has emerged. A trio of big banks, Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, have said they will no longer sell third-party mutual funds to clients of their financial planning arms. Their response to KYP is to only sell in-house products.

Ontario Finance Minister Peter Bethlenfalvy has asked the provincial securities regulator to review that decision by these banks. But for now, it’s clear that some investment companies equate products they know with products that make the most money for them.

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