Although securities regulators are divided on whether the investment industry should adopt a "best interest" standard as proposed by the Canadian Securities Administrators (CSA) and financial services firms largely have come out against such a standard, financial advisors appear to support the idea decisively.

In this year's Report Card series, Investment Executive (IE) asked advisors in each of the major distribution channels - brokerages, full-service and mutual fund dealers, banks and insurance agencies - whether they support a proposal from the CSA to introduce a best interest standard to govern client/registrant relationships. Overall, the response from advisors was decidedly positive: 74.1% of advisors said they're in favour of the proposal, with only 25.9% against it.

The highest level of support for the idea comes from advisors at the banks: 94.1% of the branch-based advisors said they favour the CSA's proposal. The least favourable response came from advisors at the full-service and mutual fund dealers; yet, almost two-thirds (65.7%) of these advisors said they support the regulator's proposal.

Advisors at the insurance agencies were right in line with the overall average: 74.1% endorsed a best interest standard. Advisors in the brokerage sector were close behind: 71% favoured of the proposed standard.

In addition to a straight "yes or no" question about whether advisors support the best interest standard, IE also asked advisors for their comments on the idea in an effort to gain some insight into how they view the issue.

Many advisors who support the idea of a best interest standard said they believe it would enhance the industry's image, help eliminate shady advisors and bring the industry's standards in line with the way clients should be treated anyway. For the most part, many advisors believe that it's just the right thing to do.

"We always need to be doing what's in the best interest of clients. Being judged against that standard is fair," says an advisor on the Prairies with Mississauga, Ont.-based Investment Planning Counsel Inc. (IPC). "There are a lot of advisors who are not doing that and just focus on generating the most revenue for themselves and not what the client really needs."

"That we haven't got there already is shameful," says an advisor in Alberta with Toronto-based PPI Advisory. "If I were a client, I'd be irate if I understood the lack of insurance advisors' accountability."

Many of the advisors who said they support a regulatory best interest standard indicated that they agree that it would be in the industry's best interest.

"At the end of the day, anything we can do to formalize the fair treatment of clients will only help us in the long run," says an advisor in Ontario with Toronto-based Raymond James Ltd.

"Hopefully, [a best interest standard] would bring more integrity to the industry," adds an advisor in Ontario with Montreal-based Peak Financial Group, "and weed out some of the idiots who shouldn't be in this industry."

Of course, advisor support for a regulatory best interest standard is not unanimous, although the notion that clients' interests should come first is widely accepted. Indeed, several advisors who said they don't support the CSA introducing a best interest standard indicated that it's not necessary because advisors should already be putting clients first, and regulating that would be redundant.

Some of the more thoughtful opposition to a best interest standard comes from advisors who expressed concerns about how to define "best interest" and how it would be enforced.

"I have grave reservations about this because it's not clear what [regulators] mean by 'best interest'," says an advisor in Ontario with Lévis, Que.-based Desjardins Financial Security Independent Network. "I have no problems with requiring high ethics, but [the proposal] is too vague and I don't want to be in a constant battle."

Meanwhile, a smaller minority of advisors were opposed outright to the idea of any added regulation. Says an advisor in Ontario with Toronto-based TD Wealth Private Investment Advice: "Transparency is a good thing, but [regulators] are going too far. They're painting every advisor in the country as a bad apple."

Adds an advisor in British Columbia with Montreal-based National Bank Financial Ltd.: "Regulators need to get out of the way. We're not all dirtballs."

Yet, some advisors share these negative views of some in the industry and hope that the adoption of a regulatory best interest standard will help repair the industry's image among clients.

"I want the industry to thrive. I don't want to be associated with advisors who are thought of as used-car salesmen," says an IPC advisor in Atlantic Canada.

This overall strong support for a best interest standard from the advisor community certainly stands in stark contrast to the opposition that the firms themselves and industry lobbyists have expressed. Indeed, advisor support seems to outstrip the CSA members' enthusiasm for the initiative, given that the provincial securities commissions in Ontario and New Brunswick are the only ones pursuing the concept.

Regulators in B.C. were against a regulatory best interest standard from the start and didn't even participate in the CSA's consultation. Yet, this negative view is not shared by advisors in B.C.: 71.5% of advisors surveyed in that province said they support the idea of a regulatory best interest standard, slightly below the national average.

"Would anyone support a rule suggesting that we should not be working in the clients' best interest? Of course, we should be working in the client's best interest," says an advisor in B.C. at Vancouver-based Odlum Brown Ltd. "We're trying to elevate this industry to a profession - and yet, there's too much focus on salesmanship to the exclusion of the client's best interest."

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