: Royal Bank of Canada - Submission

June 17, 2016

Expert Committee to Consider Financial Advisory
and Financial Planning Policy Alternatives
Frost Building North, Room 458
4th Floor, 95 Grosvenor Street
Toronto, ON M7A 1Z1

Dear Sirs and Mesdames:

Re: Preliminary Policy Recommendations of the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives

This letter is being submitted on behalf of RBC Dominion Securities Inc., Royal Mutual Funds Inc. and RBC Wealth Management Financial Services Inc. We appreciate the opportunity to comment on the preliminary policy recommendations of the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives published on April 5, 2016 (the “Preliminary Recommendations”).

RBC supports establishment of a comprehensive legal framework to regulate financial planning based on harmonization of standards among financial regulators. We applaud the Ontario government for its leadership in advancing preliminary policy recommendations, and recognizing the need to leverage the existing regulatory structure. We believe that it is in the public interest to ensure that those who hold themselves out as financial planners meet a defined standard of competence, proficiency and ethical practice.

Given the current fragmentation among financial regulators, we urge the Ontario government to promote a harmonized, national approach to regulating financial planning across Canada. Careful consideration should be given to concurrent regulatory developments (e.g. Canadian Securities Administrators (CSA) Consultation Paper 33‐404: Proposals to Enhance the Obligations of Advisers, Dealers, and Representatives) in order to align policy solutions and avoid duplicative regulation.

Regulation of Financial Planning in Ontario

We are of the view that the definition of Financial Planning contained in Appendix A of the Preliminary Recommendations is too broad. The definition of Financial Planning in the Preliminary Recommendations encompasses services offered by others in the financial services industry, including registrants, in the ordinary course of business. We support a regulatory approach which focuses on regulation of individuals who and firms whose employees hold themselves out as financial planners or who provide a comprehensive financial plan, which involves assessing an individual’s current financial and personal circumstances against their future desired state, and developing strategies that will help meet their personal goals, needs and priorities in a way that aims to optimize their financial position. A financial plan takes into account the inter-relationships among relevant financial planning areas in formulating appropriate strategies. These areas include financial management, insurance and risk management, investment planning, retirement planning, tax planning and estate planning.

Similarly, RBC has concerns that the Preliminary Recommendations in general are too broad in scope in light of the fact that they are intended to apply to individuals or firms that provide “Financial Product Sales and Advice”. The definition of “Financial Product Sales and Advice” in the Preliminary Recommendations would cover any firm or individual in the financial service industry. This would include registrants governed by IIROC and the MFDA and employees in bank branches who sell deposit-instruments governed by the Bank Act. Imposing standards on registrants and firm employees, who are already regulated through other channels, is duplicative and inefficient.

RBC does agree that individuals who and firms that provide Financial Planning and whose Financial Product Sales and Advice activities are regulated by the existing regulatory framework for securities, insurance and mortgage brokering should have any associated Financial Planning activities regulated by their existing regulator and in case of individuals or firms which operate outside of the current regulatory framework for securities or insurance, we support the creation of the proposed Financial Services Regulatory Authority in order to impose a consistent regulatory oversight.

Harmonization of Standards

In response to the recommendation that the education, training, credentialing and licensing of individuals engaged in the provision of financial planning be harmonized and subject to one universal set of regulatory standards, we support this position. More specifically, we support establishment of a general legal framework setting out definitions, standards of conduct, proficiency and ethical practice including the criteria for accreditation bodies.

Statutory Best Interest Duty

The recommendation that a statutory best interest duty (“SBID”) be adopted as a uniform and codified standard of care is far too broad and vague. We urge the Ontario government to take into account the ongoing CSA Consultation Paper 33‐404 prior to establishing a SBID that applies to Financial Planning and individuals or firms that provide Financial Product Sales and Advice. . Given the significance of the proposed changes, we believe that the standard of care in the context of financial planning should be considered critically within the context of an evolving regulatory regime. For example, we note that the CSA moved away from the adoption of a statutory best interest duty, based on the feedback from public consultations.

Referral Arrangements

We find the proposed criteria for payment of referral fees to third parties overly restrictive and inconsistent with regulation of referral fees with National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. We strongly encourage the Ontario government to align regulatory regimes wherever practicable and avoid creating an unlevel playing filed within the industry.

Titles and Holding Out

We agree with the recommendation that the use of titles by individuals and firms be prescribed in order to reduce consumer confusion. As above, we encourage the Ontario government to consider the ongoing CSA consultations related to enhancing the registrant - client relationship which will also address issues such as harmonization of titling across different distribution channels.

Thank you for the opportunity to provide these comments. We would be pleased to discuss with you any of the matters outlined in this letter.

Yours truly,

“Nick Cardinale”
Chief Compliance Officer
RBC Dominion Securities Inc. (Retail)

“Linda Wu”
Chief Compliance Officer
RBC Wealth Management Financial Services Inc.

“Kevin Bresler”
Chief Compliance Officer
Royal Mutual Funds Inc.