CD Howe Institute roadmap proposes smarter regulation to extend financial advice
A new policy blueprint from the CD Howe Institute calls for a sweeping “regulatory reset” to bridge the growing advisory gap affecting middle- and lower-income Canadians.
The report, authored by Gary Edwards, co-founder and principal of Golfdale Consulting, argues that an increasingly dense and fragmented regulatory environment is limiting access to personalized advice, particularly for households with modest investible assets.
At its core, the paper contends that while regulation is essential for protecting consumers, the cumulative burden many advisors carry imposes fixed costs that disproportionately impact small-account clients. As a result, many advisors are forced to stop serving those segments altogether, leaving a large portion of Canadians without meaningful financial guidance.
The report notes that many Canadians are investing without ever consulting a professional advisor with around 51%of households who recently purchased financial products doing so unadvised.
Among those holding less than $50,000 in assets, 49% reported not receiving any foundational education from advisors on financial concepts and just 38% of lower-income households had access to advice, compared with 60% in higher-income groups.
These patterns, the author argues, constrain broader economic goals. When fewer households engage with retirement vehicles, savings, and capital markets, the country’s productivity potential is weakened.
A central theme of the report is the analogy of “regulatory iatrogenesis” or regulation intended to help that ends up doing more harm. Edwards cautions that rules applied without rigorous, evidence-based justification risk pricing out advisors and the clients they aim to serve.
The report points to Australia’s experience as a cautionary example. There, sweeping reforms designed to curb adviser conflicts of interest ultimately reduced the number of active advisers and increased the cost of advice, leaving mid-market clients underserved.
In Canada, measures such as CRM2 and the Client Focused Reforms have advanced transparency and suitability standards but have not prevented firms from raising minimum thresholds or excluding smaller clients due to increased compliance costs.
The regulatory web of more than 25 distinct authorities (federal, provincial, and self-regulatory) overlap in their oversight functions, compounding the challenge for firms operating nationally.
Rather than layering on additional rules, the report proposes a two-part framework for modernizing regulatory governance.
First, it recommends that regulators, including self-regulatory bodies, adopt burden-reduction mandates similar to the Treasury Board’s Cabinet Directive on Regulation. For every new administrative cost introduced, a corresponding repeal or amendment should offset the impact.
Second, it calls for mandatory oversight and evidence-based rulemaking. Any major regulatory initiative that materially expands reach, imposes significant new compliance burdens, or restricts consumer access should undergo a process requiring clear problem definition, transparent cost-benefit analysis, public scrutiny, and accountability.
The report also recommends harmonization across jurisdictions through mutual recognition of equivalent standards, reducing duplication and compliance friction.
The report ‘Regulatory Reset: A Policy Roadmap for Expanding Financial Advice to Middle- and Lower-Income Canadians’ is available on the CD Howe Institute website.
