Using words such as “wealth,” “asset management,” “insurance” and “retirement” beside the word “planner” may be restricted in Ontario as the province contemplates regulating financial planners in the province.

In March, the Ontario government released a consultation paper setting out its hoped-for plans to restrict the use of the title “financial planner” to those holding a recognized financial planning credential, prohibiting the use of titles similar to “financial planner” and others that could mislead a consumer, as well as putting together a central database of financial planners.

Submissions on the consultation paper are set to close April 16.

The consultation paper follows a report by an Expert Committee about a year ago. That report recommended that the Ontario government create a harmonized regulatory framework for financial planning and advisory services. Included would be establishing proficiency requirements and restricting the use of some titles.

A mystery shopping exercise conducted by regulators in Ontario found 48 different titles used in the industry, but noted they didn’t necessarily accurately reflect a person’s qualifications or expertise.

The province’s consultation report also repeated an Expert Committee comment that with the exception of the mortgage brokering sector, there are no uniform regulatory standards for the use of titles in the financial services industry.  A regulatory framework to restrict the use of the “financial planner” title “would close the gap that currently allows the unregulated use of the title.”

Six specific standards

The paper outlines six specific standards for recognizing a credential, including a focus on financial planning, an education or course requirement, an examination requirement, a code of ethics or standards, a continuing education requirement and a disciplinary process.

It also noted that there are concerns about the unregulated use of the “financial advisor” title and is asking stakeholders to comment on how that title should be treated under its suggested framework.

The paper also states that it “will consider an appropriate transition period” for those already using the financial planner title to measure up to the new standards.

The paper has met with widespread approval from financial advisor groups. 

“The details are eventually what matter but certainly, overall, we found the scope of it acceptable,” said Susan Allemang, director, policy and regulatory affairs at the Independent Financial Brokers of Canada (IFB).

Allemang noted the discussion on who can call themselves a financial planner has been going on for many years and IFB has always maintained that only those who have the proficiency and the accreditation should be able to call themselves financial planners.

“Our concern is capturing people who do a piece of financial planning as part of something else that they do, like a needs assessment for life insurance or determining product suitability. That’s where we would see that financial planning needs to be separated and not be just a mere component of advice,” she said.

Allemang added that whatever list of accredited names the government decides on, it should be principles-based so compliance officers can evaluate the proprietary of the title as opposed to just having a hard list of names. “If you get into a hard list then [what happens if] another title comes up. I think there needs to be a bigger focus on the appropriateness of a particular title. How would you measure that?”

Allemang said the most common designation among IFB members is the CFP, followed by the CLU, while many have both accreditations.

Greg Pollock, president and CEO of Advocis, agreed with the need to determine what credentials or other conditions must apply for people to hold themselves out as a financial planner or a financial advisor. “I think that’s a very good discussion and one that we need to have,” said Pollock. 

Advocis believes the consultation paper represents a major step forward in ensuring insurance advisors are considered professionals in the eyes of the public and the industry as a whole.

Still up in the air is the number of titles that should be out there, but Pollock said it should only be a handful of titles at most. “That’s what I’m hearing from members, that’s what I’m hearing from advisors and we would concur that that’s a good direction to move in.”

He said the CLU should be considered a financial planning designation and will state that when Advocis submits its comments.

Professional designations

Just a week before the government released its consultation paper, Advocis announced it was introducing two new professional designations and establishing minimum education requirements for new members as part of its attempt to get its members recognized as professionals.

Pollock said Advocis is not waiting for the Ontario government to decide on the future of financial titles before Advocis releases more information about its first designation and the required continuing education credits. That one is expected to be released in a couple of months’ time, with the second designation coming out in another eight to 10 months.

He said a program Advocis has entitled the Way Forward looks at the future of financial advisors and what kinds of accreditations and education they will need to meet changing needs.

For a number of years, Advocis has wanted to move from a trade association to a true professional association.

“This change is no small matter, as the standards, rules, policies, and procedures of a professional association are considerable,” Advocis stated in a note to members. “In fact, many of the questions raised in the Consultation [paper] are directly related to the issue of professionalism. To that extent, Advocis is well prepared to show how it is rising to the challenge posed by the Consultation.”

Part of that will be coming up with the new designations that will fill what Advocis believes are key gaps between licensing and achieving financial planning designations. “Achieving a recognized and meaningful designation and maintaining membership in a professional association should be pre-requisites for using protected titles; in concert, they serve to greatly enhance consumer protection and professionalism in the industry.”

Cary List, president and CEO of the Financial Planning Standards Council (FPSC), said the paper is generally headed in the right direction. There has been all-party support for the titles initiative in the Ontario legislature. But List said if there is a change in government after the June provincial election it will mean working with a whole new group of people and potentially delay the initiative.

Still, List said he is pleased that the paper focuses on ways to ease consumer misunderstandings about titles and the recognized services advisors perform.

“As long as we continue to perpetuate the confusion that’s out there and the lack of distinction and the lack of understanding as to what they should be able to get from them and what kind of professional expectations they should be able to get from them, we are doing a terrible disservice to the consumer.”

In particular, he said he believes there needs to be more thinking around titles and requirements in general, particularly for those with multiple licences or specialties, such as the EPC or TEP designations.

Consumer confusion

However, List also said opening up titles to appease everyone will only debase the financial planner designation and become counter-productive for consumers.

“There seems to be an aversion to saying yes, there is no place for multiple bodies and multiple designations – that’s going to confuse consumers. We should do like all other professions and have a profession that’s around one set of standards and we are not seeing that and that is a concern to us,” he said.

As it currently stands, FPSC is not in favour of calling the CLU a financial planning designation. “We would be very supportive of promoting the CLU as a recognized or approved specialty for financial planners to further their education…but it’s not an alternative to a CFP as far as we’re concerned.”