The Four Pillars

The financial services industry in Canada is made up of four pillars: banks, trust companies, insurance companies, and the final pillar, dealers, brokerages and wealth management firms. As illustrated in the graphic below, each of these pillars offers consumers different services, although there is some overlap in the services offered.

For a very long time, banks couldn’t sell insurance or own proprietary brokerage companies. There were rules that kept the four pillars of the financial services industry separate. The pillars are no longer kept separate but they serve as a useful conceptual way to separate the four types of financial institutions and what they do.


The Flow of Money

Issuing institutions and intermediaries either underwrite or broker deals that create products for the financial markets. Distributing institutions and intermediaries are the “middle-men (and women)” between buyers and sellers of financial products. A broker, mutual fund salesperson and life insurance agent are all distributors. There are several affiliated companies, which can process orders, settle trades and hold securities on your behalf. This network of companies is regulated at the federal and provincial/territorial levels for your protection.