By Robert Sewell

In Canada’s financial industry, “fiduciary duty” is a familiar term that’s often cited yet poorly understood.

Many financial professionals are assumed to have a

fiduciary obligation

to act in their clients’ best interests. In practice, however, the standard widely varies.

For some advisers, it means little more than recommending investments that are merely suitable. For others, particularly discretionary portfolio managers, it involves a far higher bar: prioritizing client interests, fully disclosing conflicts and aligning every recommendation with the client’s long-term goals.

This gap between perception and reality raises an important question: what do Canadian investors truly deserve?

Canada’s missing standard

Despite the widespread use of fiduciary language in financial marketing and client conversations, Canada lacks a clear, enforceable national standard defining fiduciary duty for financial advisers.

Instead, investors must navigate an investing landscape clouded with mixed messages, different compensation models and varying levels of care.

As a result, many clients are left questioning whether the advice they receive from their advisers is genuinely in their best interests.

Many Canadian advisers strive to uphold fiduciary principles by registering with their provincial securities commissions, but there is no single, standardized designation that identifies whether an adviser has a fiduciary duty.

The term “fiduciary” is broadly used in the industry to describe advisers who follow high ethical standards, even though specific legal obligations vary depending on their registration category and client relationship.

In the

United States

, the fiduciary concept is more clearly defined and supported by specific regulatory structures and designations. The

U.S. Securities and Exchange Commission

‘s registered investment adviser (RIA) form clearly separates fee-based fiduciaries from commission-based brokers.

These advisers must operate under explicit standards that prioritize client interests with enforceable accountability. That clarity fosters trust. Investors know what to expect and who is working in their interests.

Canada’s conflicted advice model

Without such regulatory clarity, Canadian investors face a confusing financial landscape because they cannot be confident that their financial adviser’s compensation model isn’t influencing their investment strategy.

An example is trailing commissions: ongoing payments a financial adviser or dealer receives when an investor continues to hold a fund. While they are being phased out by regulators, they show how compensation structures can encourage advisers to make decisions that aren’t fully aligned with their client’s best interests.

Even when these conflicts are unintentional, they can erode trust and compromise an adviser’s ability to deliver truly impartial, client-centred advice. Although some national guidelines exist, they are vague and lack the force of a clearly defined, enforceable regulation.

Financial advice should be objective, personalized and transparent. It should solely focus on the client’s best interests, grounded in their goals, risk tolerance and life stage, rather than on the incentives of a commission-based compensation model.

Canada needs a clear, nationally recognized fiduciary framework to protect investors, elevate the profession and bolster public confidence. The standard should include a consistent definition and enforceable rules on compensation, providing investors with clarity and properly recognizing advisers who already adhere to high standards.

  • Sense of duty is a two-way street when it comes to fiduciaries
  • What makes you a fiduciary and what are your obligations?

Until that happens, investors must advocate for themselves by asking their advisers direct questions:

  • How are you compensated?
  • Does your compensation vary depending on the investment product you recommend? If so, why?
  • Are you legally obligated to act in my best interest?

The Canadian fiduciary standard should be a pillar of investor protection, not an unspoken assumption. It’s time for Canada to clarify who is and isn’t a fiduciary and the value the relationship can provide to Canadian investors.

Robert (Bob) Sewell, CFA, CPA, CMA, CFP, is chief executive of Lorne Park Capital Partners Inc. and the founder and chair of Bellwether Investment Management Inc.