Canadian Lawyer

w w w . c a n a d i a n l a w y e r m a g . c o m M A Y 2 0 1 9 55 I n a world where consumers are always looking for opportunities to cut out middlemen and gatekeepers, finance is no exception. The rise of do-it-your- self online investing is raising new questions for regulators and lawyers serv- ing clients in wealth management say regulators need to get with the times. In a thriving economy with a soaring stock market, Canada's tradi- tional retail investment products seem just fine to investors, says Kevin Rusli, a partner at Blake Cassels & Graydon LLP. But the economy is slowing down. After a three-per-cent growth in 2017, Canada's GDP lagged last year with an expansion of only 1.8 per cent. When growth begins to slow and a recession seems near, Canadians will increasingly scrutinize their management fees, and in Canada, retail investment products are among the most expensive in the world, he says. Middle-income investors will tend to venture away from financial advisors and mutual funds in these circumstances to something less expensive — such as do-it-yourself investing products like robo-advisors or exchange traded funds. "People are realizing that the asset man- agement industry may no longer be enough for long-term sustainable growth," Rusli says. ETFs outpaced mutual funds in sales last year and are the fastest-growing area of Blake's asset management practice, he says. Robo-advisors such as Wealthsimple, Questrade, Justwealth Financial Inc. and WealthBar are also ascending. "Particularly, in the last few years of the market since 2008, [investors have] expe- rienced high costs, they're paying a lot for their investments and they're not making very much money," says Rebecca Cowdery, a partner at Borden Ladner Gervais LLP, who practises corporate, commercial and securi- ties law with a focus on the investment man- agement industry. "And I think they feel that there is too much of the investment industry making money off investors, yet investors are not making very much money themselves." In a regulatory environment that values investor protection and transparency, Rusli says, these affordable, autonomy-empower- ing products mesh with the spirit of the regu- lation. But Cowdery, who spent nine years as a senior investment funds regulator with the Ontario Securities Commission, says the Financial regulators continue to play catch up as robo-advsiors and ETFs cut out the middleman for investors By Aidan Macnab DO-IT-YOURSELF REGULATION W E A L T H M A N A G E M E N T L E G A L R E P O R T MATTHEW BILLINGTON

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