: Canadian Securities Institute - Submission

June 17, 2016

Expert Committee to Consider Financial
Advisory and Financial Planning Policy Alternatives
c/o Frost Building North, Room 458
4th Floor, 95 Grosvenor Street
Toronto ON M7A 1Z1

Re: Preliminary Recommendations of the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives

The Canadian Securities Institute (CSI) is pleased to submit the following remarks in response to the Expert Committee’s preliminary recommendations.

CSI is the leading provider of accredited financial services proficiency learning solutions in Canada. Our expertise extends from securities to mutual funds, from banking and trust to insurance, from portfolio management to financial planning and wealth management. CSI also offers specialized financial services designations including the Personal Financial Planner (PFP®). We are IIROC’s primary partner for proficiency courses and exams for securities licensing.

CSI is in agreement with many of the recommendations set out by the Expert Committee. We commend the Expert Committee for providing a clear and concise set of recommendations that has fostered healthy debate among stakeholders.

We believe that the Committee is in a unique position to recommend bold initiatives. It has the mandate to make recommendations across various advice and product channels. Ideally these would result in more cohesive policies and reduce the consumer confusion that exists in today’s siloed regulatory framework. Respecting the Committee’s provincial mandate, it is important that the suitability of any recommendations not be limited to Ontario but also be relevant for all other provinces. This is critical in order to maximize the beneficial impact these recommendations will have on the pan-Canadian review of financial advice and consumer protection.

Regulation of Financial Planning in Ontario

We are in agreement with the committee that those who claim to provide financial planning services (either expressly or implicitly through holding themselves out as a Financial Planner) should be subject to regulatory requirements. We support using the existing regulatory framework to oversee and implement these new requirements.

We do believe that this regulation should be limited to “comprehensive” financial planning. The Committee’s definition of financial planning however is broad and may inadvertently capture activities performed by competent financial advisors in meeting their know-your-client and product suitability requirements.

Harmonization of Standards

We agree with the committee’s recommendation that a harmonized standard be set and met by all those holding themselves out as Financial Planners. This standard can be established cooperatively between the existing regulators and organizations such as CSI and the FPSC who already have welldefined competency standards for financial planners that are highly respected by industry participants.

We agree that the regulator should approve appropriate designations. In approving designations from among the current plethora available, the regulator must select only those designations that are truly focused on both comprehensive financial planning and meeting the high standards set for professional designations. Credible designations such as the PFP® and the CFP® meet rigorous standards based on a professional competency profile, significant mandatory education, a robust certification examination that tests comprehensive financial planning competencies, relevant experience, on-going professional development and adherence to a code of ethics. In the case of the PFP® and the CFP®, both designations are accredited under the international ISO standard 17024.

Statutory Best Interest Duty

The Expert Committee released its preliminary recommendations prior to the Canadian Securities Administrators’ publication of its consultation paper 33-404 which deals with the best interest issue. Given that the OSC (and the CSA) are studying this issue, we think the Committee should limit its comments to directional recommendations so as not to duplicate effort. At this stage, CSI is aligned with CSA provinces Quebec and Alberta, which are concerned about a blanket best interest standard being applied across the whole industry. We believe that CSA’s proposed “targeted reforms” will go a long way to meeting the objectives and the “spirit” of a best interest duty in a pragmatic manner that can be executed effectively.

Titles and Holding Out

We fully support the Committee’s recommendation to limit the use of titles and designations in order to minimize confusion for consumers.

The regulation of the title “financial planner” (particularly if that is limited to those providing comprehensive financial planning) deals with only a small segment of the financial advisory space.

Individuals providing “financial product sales and advice” encompass a wide range of advisors from those selling proprietary insurance products to those providing private client services to high-net worth clients. The range of services and expertise consumers are seeking is broad, giving rise to a commensurate breadth of advisor specializations. It is therefore vital to find the right balance between reducing consumer confusion in titling while allowing advisors to specialize and hold themselves out with meaningful and appropriate titles.

In order to achieve this balance, we suggest that regulators work with organizations that confer credible designations and other credentials to identify which specializations are worthy and to define the competencies and standards required for each specialization. In effect, we advocate for applying the same approach proposed by the Expert Committee for harmonizing the standards for financial planners.

Financial Literacy and Investor Education

We agree that there is a need for further support of raising the financial literacy of consumers. As an educator, CSI appreciates the importance and benefits of education. However, due to increasingly complex financial products and consumer demographics, the asymmetry in knowledge between consumers and advisors is going to continue to grow. This dynamic will persist and outpace efforts made to promote investor education. The responsibility of regulators therefore is to ensure a rising standard of competency and integrity of professionals that provide critical financial advice to consumers.

In closing CSI is looking forward to collaborating with the Expert Committee, regulators and other stakeholders as this important initiative continues to move forward.


Marc Flynn
Senior Director
Regulatory Relations and Credentialing
Canadian Securities Institute (CSI)

cc: M. Muldowney, Managing Director, CSI
D. Bell, Associate Director, CSI

Appendix – CSI September 21, 2015 Submission to the Expert Panel