Advisors are making it clear they want to be a part of the conversation as the Canadian Life and Health Insurance Association develops its new compensation disclosure guideline.
“That is an important reason for why we took the immediate step of pushing back the implementation starting date to Jan. 1, 2019, so as to allow for sufficient time for this consultation to take place,” said Lyne Duhaime, senior vice-president of Quebec affairs and distribution at the CLHIA.
Read: Compensation disclosure guideline making waves in benefits, retirement market
Many advisors are already disclosing their compensation to their clients, as the CLHIA found in responses to its request for feedback on the guideline. But however the details fall into place, “advisors need a strong voice” to ensure it addresses their concerns, added Duhaime.
Last month, the CLHIA released a guideline for disclosing compensation paid by insurers to intermediaries in group benefits and retirement services. Under the guideline, insurers will soon begin to disclose direct, in-direct and in-kind compensation paid to advisors in a written report provided to plan sponsors at least annually. For new contracts, they’ll provide the report on or before the effective date.
According to Duhaime, it’s the right time for such a guideline because “regulators and other stakeholders have signalled to the industry that they expect insurers to proactively identify and address market conduct risks and to take the necessary steps to address any anticipated issues.” She noted the industry needs to demonstrate it’s serious about taking action on the issue. Besides the guideline, she added, the industry can also implement advisor reviews and voluntarily restrict incentive travel programs.
Read: CLHIA sheds more light on compensation disclosure guideline
But rather than waiting for regulators to take action, the industry would do well by proactively challenging itself, said Duhaime. “Plan sponsors who contract with an insurer to provide their employees with group benefits and group retirement services have a responsibility to their plan members and need to have access to the best possible information about the products and services they purchase on behalf of their members.”
There’s an increasing expectation of transparency for plan sponsors, regulators and other stakeholders on the issue of compensation, noted Duhaime, who said the guideline will help ensure “fair and appropriate outcomes for plan sponsors and plan members and . . . building trust among all participants.”