In Canada, most of the wealth management firms (advisors who work with clients) and investment product manufacturers (like mutual fund companies that provide investment products) are either owned publicly or privately.
If a company is public, it means that you can buy its stock on an exchange. It also means management is responsible to the shareholders of the company (who may or not be clients or invest in the products of said company).
If a company is private, it also means that management is not responsible so much to the investors as it is responsible to the private owners of the company.
In the case of a product manufacturer, one could argue that nothing is really wrong with this scenario since financial advisors and investors should steer money into suitable products and a manufacturer will live or die by the popularity (or suitability) of its products.
In the case of a wealth management firm (a company who provides financial advice to investors/clients), there is a structural conflict of interest. It is compounded if that same firm also manufactures products (which is not rare by any means), as you and I both know that the possibility exists that proprietary products are pushed upon the salesforce.
There is a third possibility that is not ubiquitous, but seems like a great structure: The company is owned by the clients. Sounds crazy, does it?
Well, you may be surprised to learn that Vanguard Funds in the United States is in fact owned by the clients. With management now being responsible to the clients it is easier to understand why the average expense ratio for Vanguard Funds is a miniscule 0.20% and why they manage about $1 trillion in assets: they are guided by accountability to the client and no-one else.
I heard an unconfirmed report that Vanguard will be setting up shop in Canada in 2010. I have to stress there is no confirmation of this, but if it were to happen it would be the impetus for a lot of change in the financial services in Canada – guaranteed.