Investors need access to high-quality financial advice that is objective and fair and puts the client’s interest first. Regulators and policymakers around the world recognize this need, and several countries have launched initiatives to improve investors’ access to such advice. These initiatives include efforts to bring greater transparency to the financial advice industry and also to address misselling.
Some regulators have examined limits or bans on sales inducements, which can include payments, commissions, gifts, or kickbacks associated with the sale of investment products. These inducements, which are often paid to advisers by distributors, can lead to misselling that results in advisers putting their own interests before the needs of their clients.
Other regulators have made improvements in the clarity required from financial advisers in reporting fees and conflicts of interest. This problem is not new—CFA Institute members have been aware of it for years. In the 2013 Global Market Sentiment Survey (GMSS), CFA Institute members in Europe, the Middle East, and Africa most frequently identified misselling of products by financial advisers as the top concern. Respondents to CFA Institute’s 2014 GMSS ranked misselling, broadly defined, as the most serious ethical issue globally.