The financial services sector has had a bad couple of weeks: opponents of "best interest" standards and regulatory action to eliminate embedded commissions have suffered as recent enforcement cases involving fund managers and reports from disgruntled former bank personnel underlined the extent to which a "sales culture" still pervades much of the advisory business. Regulators' bias to inaction surely has been shaken by recent events that expose the financial services sector's preference for sales and revenue generation.

To begin, the Ontario Securities Commission (OSC) brought an enforcement case against a fund manager that harkened back to the Wild West days of the fund industry, when fund companies wooed reps to pitch their products with lavish trips under the guise of industry education. The regulators introduced rules to curb this sort of activity years ago. But the underlying truth remains: clients' interests often don't come first.

The OSC followed this with another case involving a fund manager, this one for alleged insider trading. While the allegations against some in this case have not been proven, one former executive has admitted to trading on inside information and tipping off a broker in an effort to make up for previous poor performance with a profitable trading tip.

At the same time, ongoing revelations about the pressures faced by front-line bank personnel to pitch products to customers, including investment products, primarily to meet sales targets rather than to serve clients' needs further highlights the extent to which the industry's thirst for sales and asset accumulation can override clients' interests.

None of this looks good at a time when the sector is trying to make the case that there's no need to raise conduct standards or to interfere with compensation models that regulators have concluded pose significant conflicts and distort markets.

Changing the rules won't eliminate investor harm or eradicate misconduct, but would push advice further to the centre of the client/financial advisor relationship and make sales more of a side effect, an outcome that would benefit investors - and the majority of advisors.

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