: Institut québécois de planification financière - Submission

Public Consultation - Financial Planning and Advisory Services Review

Presentation by Jocelyne Houle-LeSarge, FCPA, FCGA, President & CEO of the Institut québécois de planification financière

June 2, 2016

Good afternoon. I’m Jocelyne Houle-LeSarge, FCPA, FCGA, President & CEO of the Institut québécois de planification financière. I want to thank the Committee members for your time and for allowing me to comment on your preliminary recommendations.

The IQPF was created in 1989 with the adoption of Bill 134. In 1998, Bill 188 – An Act Respecting the Distribution of Financial Products and Services – recognized the role of the IQPF as the only organization authorized to grant financial planning diplomas and establish rules respecting the ongoing professional development of financial planners. In Quebec, according to the law, any individual claiming to be a financial planner must have an IQPF diploma and the appropriate certificate issued by the Autorité des marchés financiers.

Since 2004, the Institut québécois de planification financière (IQPF) has been actively engaged in a process to pave the way for the creation of an order for the profession of financial planner. We are deeply convinced that this is the best way to protect the public in Québec in the face of the growing complexity of the financial markets, chronic indebtedness, lack of preparation for retirement and the dangers of fraud.

Financial planners play a critical role for clients, given their multidisciplinary training and the global perspective they have, and yet their work is not known by the public and they are often confused with service providers who sell products, even though financial planners actually provide guidance to their clients. The fact that the profession is governed by five organizations in Quebec creates confusion in the mind of the public, as well as preventing effective oversight. I fear that this Committee is proposing a very similar model. It will not work.

The needs and realities of consumers are changing rapidly, and we firmly believe that these changes should influence the way the finance professions are overseen. Creating a single professional body for financial planners would better serve the interests of the public, in terms of both education and financial protection, and at the same time guarantee professional development and attract future practitioners. Such a body would have the authority required to undertake peer investigations and hand down penalties in the case of abuse or fraud.

The crucial generalist and integration work carried out by financial planners is hard for the public to differentiate from the role of other financial, insurance and investment professionals.
Part of this confusion arises from the contradictory information given out not only by the industry, representatives and journalists, but also by organizations that are already existing and that claim the right to protect consumers regarding financial planning services.

Financial planners can be compared to GPs. In a given situation, they identify the problems, conduct analyses, offer a diagnosis, establish an intervention plan and, if necessary, refer the client to specialists. For example, a financial planner might refer a client to an accountant for their income tax returns, to a lawyer in the case of divorce, to an investment advisor for investments or to a financial security advisor for insurance products.

The advisory role played by the financial planner is of crucial importance because it occurs upstream of a series of decisions. Poor counselling by the planner can cause enormous harm to the client.

Financial planners are first in line with regard to decisions about their clients’ financial future, and they therefore should be subject to very strict oversight.

After several years of working in collaboration with the Financial Planning Standards Council (FPSC), we IQPF and FPSC have established Standards of Practice that are currently helping to standardize financial planning in the rest of Canada. The players in the sector recognize that we have created an exceptional foundation for the practice.

Despite the regulation respecting titles similar to the title of financial planner in Quebec, the title of financial planner is widely used and misused. For most people, there is no difference between a financial advisor, a personal finance advisor, a financial security advisor and a financial planner.

In our surveys of the public in Quebec, when we ask “What types of professionals can give you financial planning information?” we get the following answers:

  1. Accountants: 38%
  2. Financial advisors: 37%
  3. Financial planners: 35%

The title of financial planner is mixed up among these other representatives, although the role is very different: all the others have permits to sell products, which is not the case for financial planners who, once they have the title, are only authorized to advise the client on all aspects of their personal finances. The regulatory changes should separate the advisory services offered by the financial planner from the distribution of financial products.

With regard to public protection, a single professional body for financial planners would:

  1. Have public protection as its sole concern.
  2. Prescribe to its members assumptions and analysis methods to avoid bad counsel.
  3. Prohibit its members from placing themselves in a conflict of interest.
  4. Protect consumers from dubious commercial practices, such as long-term RRSP loans.

Information is key to public protection: the public should know where to turn in case of fraud and where to complain in the event of an abuse of trust.

We have established all the tools to ensure that the profession will be practised in accordance with the highest standards – definition of financial planning, code of ethics, code of professional conduct, standards of practice, projection assumption standards.

Most of the work is done, it is now up to the legislators to do their part. This Committee has the great responsibility of making the only right recommendation: The creation of a single professional body for financial planners, and FPSC is already well positioned to take that role.

Thank you.