The Canadian Investment Regulatory Organization has published proposed rule amendments for comment to harmonize advisor compensation across its Dealer Members by introducing an incorporated advisor compensation option for all client-facing Approved Persons. The proposal is meant to remove the current split under which advisors sponsored by mutual fund dealers, or firms registered as both mutual fund dealers and investment dealers, may use directed commissions through an unregistered corporation in most jurisdictions, while advisors registered with investment dealers must be paid directly by their firms. The proposed framework would keep the existing ability for client-facing Approved Persons to operate as employees or agents of their sponsoring dealer, repeal the directed commission arrangement now available to some advisors, and add an incorporated advisor arrangement available across the board. CIRO said the model is intended to preserve key investor protection obligations owed to clients, while providing greater consistency and flexibility and addressing the tax uncertainty linked to the current directed commission approach. It described finalizing these amendments as a key integration priority in its 2027 Annual Priorities and as completing the advisor compensation harmonization objective in its three-year Strategic Plan. If the amendments are approved by the Canadian Securities Administrators, implementation will also require changes to securities legislation.

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