Financial professionals’ titles and credentials fail to inform consumers of the actual services they provide, and in many cases add to their confusion about the roles of different types of advisors, delegates to the Vision 2020 Symposium were told.
The symposium, held by the Financial Planning Standards Council at Toronto’s Old Mill Inn, was the cornerstone of Financial Planning Week in October.
While the financial services industry puts a lot of thought into the titles it gives its professionals, most consumers don’t have a firm understanding of what financial planning is or what its titles mean, said Jason Round, senior manager, financial planning support at Royal Bank of Canada in Toronto. “I think it’s incumbent on us as an industry…to articulate more.”
Lack of consensus
One firm may call its professionals financial advisors, while another calls people who perform the same role investment representatives, and a third will use financial planners. “There’s a lack of consensus. There hasn’t been a mechanism put in place to co-ordinate discussion among all the different financial institutions,” noted Stephen Ison, principal in charge of Canadian Financial Advisor Advanced Training at Edward Jones in Oakville, Ont.
“What if a regulator decided upon just a few titles?” moderator Rob Carrick, personal finance columnist at the Globe and Mail, asked panel members.
Mr. Ison said that this might help clarify for consumers the role financial professionals play. “An educated client is a more satisfied client,” he said. “If deciding upon a few titles will do that, I’m all for it.”
But Amy Young, principal of Upside Consulting Group Inc., a Toronto-based consultancy for wealth management firms, warned that limiting titles in the industry could have the opposite effect. “It may mean consumers are actually less informed” about the services they can expect from financial professionals.” She said advisors have a responsibility to clarify the specific services clients and prospects can expect from them.
Mr. Ison noted that it is also in advisors’ interests to clarify to clients and prospects exactly how they are compensated. But he said titles in themselves won’t tell consumers whether they earn their livings through fees for services or on commissions they receive for selling products.
The confusion experienced by many consumers is compounded by the “alphabet soup” of financial service professionals’ multiple advisory and financial planning designations. The FPSC has long maintained that the Certified Financial Planner designation should be the one designation for all financial planners in Canada, and it believes that regulatory legislation is the most effective way to achieve this goal. Apart from Quebec, where the Financial Planner designation is conferred by the Institut québécois de planification and is required by all planners in the province, there is currently no mandatory designation that tells consumers in the other provinces that the holder is a genuinely qualified financial planner.
Specialties and designations
And there are many other credentials that denote industry sub-categories and specialized areas of expertise. As a result, an individual may be able to add several acronyms to his or her business card.
Another symposium panel featured members of three other professions – law, physiotherapy and accounting – who discussed their specialties and designations.
“I don’t think anyone cares about your [financial planning] designations,” Malcolm Heins, CEO of the Law Society of Upper Canada, the body that regulates lawyers and paralegals in Ontario, told symposium delegates. “The public wants to know that the advice they are getting is what they need, and that their investments are protected.”
Mr. Heins added that regulatory legislation is the way to introduce mandatory credentials. “Any profession that has tried to do this without legislation has failed,” he said.
Joy Thomas, president and CEO of CMA Canada, the body that regulates certified management accountants in Canada, said a regulatory environment adds structure and discipline to her profession. “And it enables us to achieve our over-arching mandate: to protect the public trust.”