Opinion: Canada’s moment to raise the bar for investment advice

Canadian investors deserve more than the assurance that their financial advisors have followed the right procedures. They deserve confidence that the advice they receive genuinely helps them meet their goals.

The U.K.’s Financial Conduct Authority has set a new global benchmark by introducing its Investment Advice Assessment Tool (IAAT), and Canada has an opportunity to build on this example to deliver fairer, more transparent outcomes.

The IAAT is a deceptively simple idea with profound implications. It provides a structured framework for reviewing whether advice is not only compliant in form but effective in substance. Rather than relying on paperwork to demonstrate suitability, firms must score each client file and explain clearly how recommendations were tailored to the investor’s objectives and risk tolerance. This focus on demonstrable outcomes marks a long-overdue evolution in oversight.

In Canada, regulations require advisors to understand their clients and recommend appropriate investments. Yet in practice, compliance often amounts to confirming that the right boxes were checked. When investors suffer harm because advice was technically compliant but plainly unsuitable, the limits of this approach become obvious.

A Canadian version of the IAAT would first and foremost help regulators and firms detect problematic practices before they become widespread. By reviewing patterns of scores and narrative justifications, supervisors could identify products or sales strategies that repeatedly fall short. Instead of waiting for complaints to accumulate, regulators could intervene early to protect investors.

Equally important, a structured framework would set a higher bar for what good advice looks like. Advisors who consistently deliver thoughtful, well-documented recommendations would be recognized, while those relying on boilerplate disclosures and superficial analysis would stand out. This transparency creates a culture of accountability and continuous improvement.

Practical and efficient

Technology can make this evolution practical and efficient. The IAAT does not have to be a burden. Integrated with modern compliance platforms, it can draw on existing client data, track scoring in real time and produce standardized reports with minimal manual effort. AI can help surface patterns regulators might otherwise miss, while dashboards can help firms monitor their own performance. Done right, a digital approach can reduce administrative workload and improve oversight quality simultaneously.

A Canadian IAAT would also strengthen complaint resolution. Today, disputes often hinge on procedural technicalities. Was a form delivered? Did the advisor collect certain facts? An outcomes-focused tool makes it possible to assess whether advice was truly appropriate and explains decisions clearly to investors. That clarity is essential for public confidence.

Finally, while national consistency across provinces is important, it is best understood as a supporting benefit rather than the central purpose. Standardized assessment criteria would help ensure investors are treated fairly regardless of geography. But the more transformative impact lies in moving beyond process compliance to genuine evidence of value.

Three core elements

Developing this framework need not be a heavy lift. Regulators could start by convening a working group led by the Canadian Investment Regulatory Organization (CIRO), with participation from provincial securities commissions, investor advocates and firms. The mandate: design a model that reflects Canadian legal standards and leverages technology to embed assessments into daily practice.

Three core elements should define the approach:

1. Objective scoring criteria to rate advice quality and disclosure clarity.
2. Narrative explanations to justify why recommendations fit the client’s profile.
3. Aggregate reporting tools to track trends and guide regulatory focus.

A pilot program could begin with higher-risk products or business lines where suitability challenges are more acute. Early adopters would demonstrate how the tool integrates with compliance workflows. Over time, wider adoption would make outcomes-focused assessments the new standard.

This is not about adding bureaucracy. It is about replacing superficial compliance with evidence-based accountability. If firms already act in clients’ best interests, demonstrating it should be straightforward. Technology makes that demonstration faster and more credible.

The U.K. has shown that when regulators create clear, structured expectations — and support them with practical tools — advice quality improves. Advisors become more thoughtful because recommendations must stand up to scrutiny in substance as well as form. Over time, this leads to better client experiences and a more resilient financial system.

Canada can be a leader in this shift. By adopting an IAAT approach adapted to our regulatory framework and powered by technology, we can create a culture where investors can see — and trust — that advice is measured by the outcomes it delivers.

The cost of maintaining the status quo — where process substitutes for protection — is measured in preventable harm and lost trust. A more transparent, outcomes-focused system is within reach. Now is the time to seize the opportunity to build a regulatory framework that delivers what investors expect: advice that demonstrably works in their best interests.