Ontario’s messy effort to define “financial advisor” and “financial planner”

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This article is from Citywire RIAthe sister site of, Citywire Canada. To learn more about Canada’s heritage industry, visit citywirecanada.com.

For potential investors in Ontario, finding financial advice is easy. Maybe too easy.

Canada’s most populous province has no strict rules regarding who can call themselves a financial adviser or financial planner, leaving investors with little information about the competence of their financial intermediary and their true motivation.

To address this issue, the province introduced the Financial Professionals Title Protection Act, which will set minimum standards for the use of the titles ‘financial adviser’ and ‘financial planner’. the states of act that an individual may only use one of these credentials if they have a relevant approved credential and are “in good standing” with the “approved credentialing body”.

This law was introduced by the Government of Ontario and passed in May 2019, although it is not yet in force. The framework is now overseen by the Financial Services Regulatory Authority of Ontario (FSRA) and, after two rounds of public comment, is now being submitted to the provincial Minister of Finance for approval.

The framework gives a lot of power to these approved accreditation bodies. The FSRA itself will take action against people using protected credentials without credentials, but credentialing bodies will be responsible for supervising their own members. If an accreditation body fails to take enforcement action, FSRA may revoke that body’s accreditation.

So, which degrees and certification bodies will be eligible? This remains unknown, with the application period not expected to open until the end of this year. But several industry groups are jostling for a seat at the table – and a high-stakes debate has ensued.

Who is a planner?

Among these groups is Advocis, an association of advisors with thousands of members across the country, many of whom specialize in insurance.

Advocis will be vying for two designations: Chartered Life Underwriter (CLU), which is issued by the Institute for Advanced Financial Education, and Professional Financial Advisor (PFA), which was created by Advocis in 2020.

CLU was first launched in the 1920s and is widely considered the gold standard for insurance advisors and estate planners. It is also often added as an extension of the Certified Financial Planner (CFP) designation.

However, Advocis CEO Greg Pollock believes CLU is a financial planning designation in its own right.

“CLU is actually a financial planning designation, and it focuses on wealth management. It focuses on estate planning and is really an advanced designation,” Pollock said.

Pollock added that he believed the CLU and PFA designations would qualify for title protection, although his position was pushed back.

Among those who oppose it is the Financial Planning Association of Canada (FPAC). APFC does not offer its own designations, but is a supporter of the CFP and requires its members to hold their CFP, Registered Financial Planner (RFP) or Financial Planner (Pl. Fin.) designation.

While APFC President Jason Pereira believes CLU should “absolutely” be considered a designation for financial advisors, he believes financial planners should have their CFP.

“Basically, the CLU is an insurance designation. Life underwriter is in the title. The financial planning aspects are secondary,” Pereira said.

“It comes down to a competency standard – are the estate planning or insurance documents sufficient to meet the competency criteria below the CFP level? Probably. Is everything else, all these other areas? No they are not.’

These shared opinions illustrate the range of views on what should be considered an authorized title.

After receiving a total of 44 comments in its first round of consultation and 27 in the next round, FSRA released updated guidance on the standards that accreditation bodies must meet to be considered.

According to FSRA’s latest draft, a financial planning training program should include content on the Canadian financial services market and regulatory environment, economics, ethical conduct and conflicts of interest.

It must also demonstrate an independent approach to the product and prove that it can cover a range of planning areas, including estate, tax, retirement and investment planning, insurance and risk management and management financial.

Who is an advisor?

The requirements for a financial advisor program are similar, but with less emphasis on holistic planning and more on developing, presenting, and implementing appropriate investment recommendations.

An advisor program should also include content on common investment products, and in-depth knowledge or expertise of one or more of these products, as well as adequate knowledge of estate, tax and planning retirement, financial management, insurance and risk management.

However, Pollock speculated that advisers might not be required to hold a professional designation of any kind, which he said would be insufficient.

“It looks like if someone has a mutual fund license in Ontario, they’ll be able to hold their own with the financial advisor designation,” he said. “We believe management may not be going far enough.”

Pollock explained that approximately 60% of Advocis members currently hold professional financial planning, insurance and consulting designations, including CLU and PFA.

He added that the government and FSRA fear there will be a loss of access to financial advice if the bar is set too high at the outset.

“I understand that,” he said. “So we are starting with the government, and now the regulator, and I think over time we will see the standards evolve. From our perspective, you would probably need a professional designation to survive as a financial advisor. I suspect it’s a number of years down the road.

From Pereira’s perspective, this undefined adviser standard is precisely the problem of trying to protect the term “financial adviser.” He thinks the legislation should have focused only on the “financial planner”.

This would have brought the Ontario framework closer to that of Quebec, which recognizes only financial planners and restricts other titles.

‘This [financial advisor] the title is a bit difficult to achieve,” said Pereira. “Technically it can mean almost anything…I almost wish they would go a little deeper and break down things like the real estate planner that are more topic specific.”

Who does the policing?

Some say the law does not do enough to protect consumers.

Jean-Paul Bureaud, executive director of investor advocacy group FAIR Canada, said he was “disappointed” with the framework, fearing accreditation bodies lacked the real ability to take enforcement action against rogue members.

“At what level will the FSRA set the bar when it comes to licensing an accreditation body, and what steps will they take to ensure that the accreditation body is actually making a effective app? Bureaud said.

He noted that a lack of clarity on what the system of accrediting bodies will look like, including the number of bodies that will be licensed, adds to his concern. He wonders about the role that groups like Advocis can play.

“Should we allow groups that are more like lobby groups to be accreditation bodies? Should we allow private organizations that are only interested in marketing a brand to generate revenue and pretend to enforce the law? These are some real serious questions that we’re going to have to address as this thing unfolds.

Bureaud said the current setup will still leave many consumers vulnerable.

“As part of the proposal, they are talking about going after people using the title who have not been accredited. They have the power to do it. But what about someone who is accredited, who causes harm through misconduct, and the accreditation body does not take action against that individual? This is the scenario that concerns us,” he added. “We place a lot of trust in accreditation bodies.”

A unified approach?

A lingering concern is that different provinces using different headings across Canada could complicate things for advisors and create confusion for clients.

The Ontario law “should be consistent with the Quebec standard, because it would be the beginning of a national framework, rather a situation where each province sets the bar at a different level. We put Ontario, Quebec, British Columbia and Alberta on the same page, and that’s the majority of the population,” Pereira said.

However, this can be difficult, as different provinces have already embarked on their own journey of title regulation.

In 2020, Saskatchewan passed legislation to begin the process of regulating the financial planner and financial advisor designations, and New Brunswick appears to be well on its way to doing the same, although their approaches may differ.

“In Saskatchewan, they came up with the proposal to kind of mimic the Ontario framework, with a few differences. In New Brunswick, there has been talk of introducing a similar framework, but more aligned with the Quebec model… For me, it’s about trying to find ways to reduce confusion about titles. Right now we have more of a patchwork approach,” Bureaud said.

“One of my points is that people look at the world from a consumer perspective and just try to appreciate how confusing it is.” Ultimately, what we want is clarity between your headline and what the consumer knows you do.

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