However, the report warns that access to advice, especially for smaller accounts, is increasingly at risk. Rising compliance costs and industry consolidation are making it harder for firms to serve lower-balance investors, with those holding under $10,000 facing the greatest challenges.
Compensation structures are another critical factor. Canada has largely preserved embedded fee models, which allow investors to pay for advice through product fees rather than upfront charges. Regulators previously considered banning these commissions but ultimately held back, citing concerns that doing so would make advice unaffordable for smaller investors.
Experiences in other markets reinforce that concern. In the UK and Australia, restrictions on embedded commissions have been linked to a widening “advice gap,” where lower-wealth investors struggle to access or afford guidance.
“In simple terms the Retail Distribution Review has achieved its objective of removing opaque charging through commissions and improving the training and qualification of advisors but had – along with a number of other significant developments – contributed to an advice gap opening up for the less well-off and those in need of single event type advice,” said Andrew Bailey, then CEO of the UK Financial Conduct Authority.
More balanced approach
To sustain Canada’s relative advantage, the report calls for a more balanced regulatory approach—one that continues to protect investors while also promoting competition and efficiency. It notes that most financial regulations in Canada are focused on consumer protection, with comparatively little emphasis on fostering growth or reducing costs.