A new group has emerged to oppose the Canadian Life and Health Insurance Association’s new guideline around disclosing compensation paid to intermediaries in group benefits and group retirement services.
The National Coalition of Benefit Advisors has taken shape over the past six weeks, according to Robert Taylor, managing director of Vancouver-based TRG Group Benefits & Pensions Inc.
TRG Group Benefits has taken a leadership role in driving the new group, according to Taylor, but he adds there are between 25 and 30 advisor firms that have been a part of it so far. Those involved include Todd Stephen, president and senior benefits and pension consultant at OMG Benefits Consulting Inc.; Rob Tamblyn, principal of the Benefits Co.; and Tony Fairfield and Ian Watson, principals of Fairfield Watson.
Have your say: Do you agree with upcoming changes around disclosing compensation paid to advisors?
The group’s goal is to stop the guideline in its current form, as there are too many loopholes and enforcement will be difficult, according to Taylor. “The speed of this guideline is difficult to really even grasp how this can be delivered effectively and ensure a level playing field between insurers and advisors can be maintained.”
He added: “Today, the benefit advisor role and advice is extremely complex. We help navigate the intricacies of public policy offloading, big and little pharma and the multitude of tens of thousands of businesses who provide services that interact with benefit plans daily. We felt it was time that this aspect of the financial services arena have a proper voice for the consumer and advisors who represent their concerns every day. The role of the advisor is extremely important in helping businesses strategize and ensure their risk management and expense sustainability issues are addressed effectively. Any counterpoint to those goals, whether it is driven by the CLHIA or any other stakeholder, must have a strong voice to address the consumer concerns.”
Read: CLHIA sheds more light on compensation disclosure guideline
The Canadian Life and Health Insurance Association, for its part, has already delayed implementing the new guideline for new contracts until Jan. 1, 2019.
“Advisors are valuable partners in delivering group benefits and retirement services to Canadians and their views on the new proposed standards and how to implement them are key,” said Stephen Frank, president and chief executive officer of the CLHIA, in a news release on Feb. 5. “Consultations began earlier this year and we are listening to their views. That is why we took the immediate step of pushing back the implementation date.”
The general principles of the guideline, according to the CLHIA, are a consumer-focused approach, clear disclosure to contract holders by insurers of all forms of compensation provided to intermediaries and insurer accountability.
While Taylor said the new coalition has no problem with the concept of disclosure, it doesn’t believe the guideline, in its current form, addresses transparency or conflicts of interest very well. The changes came as a surprise, said Taylor, who suggested the CLHIA moved to create the guideline unilaterally. “What was surprising to us is that all along, for the past eight months when we were first informed that disclosure was an issue insurers wanted to address, the advisor community was told repeatedly that it would be a joint initiative and we would craft the policy together. This was repeated over and over again throughout the fall, and we repeatedly asked when we were going to be engaged,” said Taylor.
“Our principle position is this — you cannot craft a guideline and try to run it through the market with zero consultation and understanding as to how this will be delivered and whether it can even be delivered without harming the consumer,” he added. “We have serious reservations whether [the guideline], in its current form, can provide any outcome that is better today for the customer and in fact have concerns that the consumer will likely be harmed.”
Read: CLHIA launches cross-Canada sessions about compensation disclosure guideline
The CLHIA is currently on a cross-country tour to meet with advisors to explain the new guideline and gather input on how to best implement it. It’s also creating an advisory committee of advisors and insurers to offer guidance.
“We need the help of advisors to ensure successful implementation, and we are committed to partnering with them on the new standards,” said Frank in the news release earlier this month.
Given the stakes and the debate, what do you think? Do you agree with the coming changes around disclosing compensation paid to advisors involved in group benefits and retirement services? Have your say in Benefits Canada‘s online poll.
Last week’s poll question asked whether shareholder dividends are an issue regulators should address. The majority, 66 per cent of respondents, agreed with the idea, suggesting it’s wrong for companies to prioritize shareholders over pension plan members. The remaining 34 per cent of those polled disagreed, suggesting shareholder issues are separate from pension matters and regulators have other tools to address deficits in a plan.
Read: Have your say: Is it time to address dividend payments amid pension deficits?
