If financial literacy is still too big of an elephant for most people to eat right away, the Financial Planning Standards Council hopes its promotion of “hiring literacy” is a step in the right direction for Canadians.
The organization still has its agenda – to promote recognition of the CFP designation, to encourage industry players to get the credential, and to further have it recognized as the gold standard for consumers to look for when seeking out financial planning advice.
In talking with Cary List, however, the president and CEO softens that stance just a little, saying that firms and advisors who are serious about professionalism, whether they’re CFP holders or not, need to promote that professionalism in a way that’s consistent and recognizable. “It’s only going to get through to consumers or to Canadians when the message is coming from all sides. We need to get the planners and the firms sending the same message,” he says. “Of course we’re going to promote the CFP, that’s what we’re about. But I think the message is much broader than that.”
He adds that planners and firms don’t need to drastically change their marketing or communication efforts, more that “they need to be aligned in messaging.”
“It’s a fundamental part of our mandate to raise awareness about the importance of financial planning but we have limited resources to send out a message. We can only do so much.”
Getting that message to take hold is a challenge as well. Notably, the FPSC’s 10 Tips for Choosing a Planner and Questions to Ask A Planner, are both documents which have been picked up, distributed and repeated in a wide range of material online, in print and across the blogosphere. Business models have even been built around the concept. At the consumer level though, this promotion doesn’t appear to have a lot of traction.
“I think the problem is that we get down to a fundamental set of behavior issues,” says Mr. List. “People want to trust people. People will naturally take the easy route or they will shy away from the difficult questions. I’m glad we still have a world where trust is the norm. For the most part people can be trusted but when it comes to your own personal well being, it’s not enough.”
In the hopes of shocking or at least surprising a few Canadians into paying attention, the FPSC commissioned the Strategic Council to survey a panel of Canadians to determine how much people generally knew about planner credentials and regulation. The research is a side project to the FPSC’s larger, five-year effort to measure the value of financial planning.
The research found that half of those surveyed thought all financial advisors were held to account by an oversight body that requires they provide ethical and competent service. Moreover, 70 per cent said they thought individuals needed to be licensed in order to call themselves a financial planner.
“Consumers are fairly well protected if you look at medicine, law, even in architecture, there are protections in law, title protection, which doesn’t allow people without appropriate qualifications and professional oversight to practice.”
He adds that getting the same recognition for financial industry professions is a long-term process. “We’re not expecting that tomorrow. There’s not going got be a private members bill and the government of the day (isn’t) going to actually introduce a bill protecting the financial planner title, but I think we need to hit it from all sides and keep hammering home the importance and the need for governments to better protect consumers. We also need to remind consumers that it’s not a regulated activity – you need to do your due diligence – we need to get as many people as possible sending the same message.”
Part of the urgency, he says, comes from the increased consumer demand for a planner’s services. Mr. List says consumers are beginning to recognize that they don’t fully understand the implications of the decisions they make, which is driving many to turn to advisors and planners for help. Many of these would-be clients, he says, have an unrealistic expectation that regulators and laws are looking after their interest in this respect.
“I think, at the very least, if we recognize that Canadians don’t have financial literacy, the easier part to get is hiring literacy – to understand what’s out there.”