: Institute of Advanced Financial Planners - Submission

September 2, 2015

Expert Committee to Consider Financial Advisory
& Financial Planning Policy Alternatives
cfo Frost Building North, Room 458
4th Floor, 95 Grosvenor St.
Toronto, ON M7 A 1Z1

Expert Committee:

The Institute of Advanced Financial Planners (IAFP) is pleased to provide comments requested by the Expert Committee as outlined in the document dated June 24, 2015.

The IAFP (www.iafp.ca), the former CAFP (Canadian Association of Financial Planners) was formed in 1987. Our principal raison d'etre is to promote the profession of financial planning by setting a standard of excellence in the competency and practice of personal financial planning for the benefit of Canadians. Through our members, who hold the RF.P. (Registered Financial Planner) designation, we agree as members to follow specific standards designed to bring a professional approach to the creation and delivery of financial plans.

In 2009 we joined other groups in founding the Financial Planning Coalition. Members include the Institute of Advanced Financial Planners, the Financial Planning Standards Council, the Canadian Institute of Financial Planning and the Institut Quebecois de Planification Financiere.

This group, the Coalition, has been working with an agreed set of principles and has been promoting the merits of professionalizing Financial Planning to government, regulatory entities and interested stakeholders. Many of these groups you will hear from in response to the request for submissions.

Let me respond to those questions that have been directed to the industry.

1. What activities are within the scope of financial planning? Is the provision of financial advice different from financial planning? If so, please explain the distinction.

Financial planning and financial advising are distinctly different services.

In the securities and life industries, a financial advisor identifies needs and makes recommendations about products that satisfy those needs. In the case of financial planning, there is a more comprehensive approach and the resulting plan has value apart from any specific product recommendations.

Another substantial difference is that financial advice is usually intended for immediate implementation while financial plans are generally implemented in stages.

Financial Planning, to us, is generally a six step process that includes clarifying the client's current financial position, identifying goals, highlighting problems, providing written guidance, implementation assistance and periodic review.

2. Is the current regulatory scheme governing those who engage in financial planning and/or the giving of financial advice adequate?

Financial advising within the life and securities offerings is relatively well regulated. However, Planning has voluntary standards and is not formally regulated in Ontario. This results in confusion from consumers who are unclear about the nature of planning and the different skill set required to practice in this area.

We believe Financial Planning standards, definitions and competencies should NOT be voluntary and should be regulated.

3. What legal standard(s) should govern conflicts of interest and potential conflicts of interest that may arise in financial planning and the giving of financial advice?

Planners should be bound by a "best interests" standard which incorporates the following principles:

  • Put the client's interest before all others
  • Act with the skill, care, diligence and good judgment of a professional
  • Provide full and fair disclosure of all important facts
  • Fully disclose and fairly manage -always in the client's favour- unavoidable conflicts

This best interest standard already applies to the planners adhering to the recently published Definitions, Standards & Competencies authored by the FPSC and IQPF and they should be codified into law.

Further, we believe that all planners should carry E&O insurance through a universal provider so that the public can easily determine the details and status of a particular planner's coverage.

More than 95% of our professional members hold the CFP prior to joining the IAFP and all ofus have supplemented that with an R.F.P. designation. The practice standards for our professional members mirror those published by FPSC/IQPF.

We believe there should be one designation that protects the consumer in financial planning matters and that the CFP should be that designation. Other designations may exist (e.g. CFA, CLU, FCSI, R.F.P.) but the consumer needs to know they are dealing with a qualified planner who holds the CFP; other designations supplement but do not replace the CFP.

4. To what extent, if at all, should the activities of those who engage in financial planning andjor giving financial advice be further regulated?

At this time, the regulatory framework for dealing with advice and the sale of products is well served through legislation and self regulatory bodies like II ROC, the MFDA and the provincial securities commissions. This is not the case with planning. All the standards referred to are voluntary and they need to be codified into Ontario law.

The IAFP and the Coalition have put forth an elegant solution to the issue of regulating Financial Planning in our brochure entitled, "A Matter of Trust". We have appended a copy to this letter and you can also view it at www.iafp.cajcontent.php?SectioniD=4&ContentiD=447.

In summary we endorse:

  • a single set of standards for financial planners
  • adoption of one set of definitions, standards and competencies
  • restrictions of title and holding out to those who have demonstrated their competence, ongoing commitment to professional ethics and professional development
  • a single body responsible for the conduct of planners.

5. What harm(s) andjor benefit(s) do consumers experience in the current environment? Please provide specific evidence to support your views where available.

It is clear from a three-year research project conducted by The Strategic Council that 81% of those experiencing comprehensive and integrated planning feel they are on track with their financial affairs.

Approximately two thirds of them feel they can cope with an unexpected emergency and 65% believe they can manage through tough economic times.

Sadly, the downside of this study reveals that when people have not had the benefit of financial planning help, only 22% believe they can retire as planned.

Why would anyone with the power to change things allow this to happen? Canadians are getting advice from people unqualified to give it, or unaccountable. They are seeking the wrong advice from the wrong people- and they are paying for it Ontarians should NOT be left in this position.

6. Should consumers have access to a central registry of information regarding individuals and entities that engage in financial planning and the giving of financial advice including their complaint or discipline history?

The answer to this question is a resounding yes. The government will need to decide how much effort is enough. The database needs guidelines as to how disciplinary action is posted - i.e. after investigation and action.

There are currently websites attempting to fulfill this role. The value of material varies widely. Further, we perceive a precarious balance between information and commercialization in most instances.

Our IAFP "Find a Planner" offers consumers links to websites and personal skill sets of our various professional members. That said, there is a large commitment required to maintain the accuracy and relevance of posted links.

Does government want to administer this sort of register or would the public be better served by a private supplier such as a college of professional financial planners?


We believe this is an opportune time for Ontario to help provide their electorate with sound steps to achieve their own financial goals. There is a gap in the oversight of advisors as distinct from planners and this creates confusion. The public is not well served by this confusion.

By professionalizing the practice of Financial Planning, we do not seek to replace the role of existing regulators. We suggest this action is complementary to their function. We believe that a professional body could be largely self-funding if that is a goal of government.

We trust you will make contact with this undersigned if you require further input. She can be reached at (250) 413-3230. We encourage you to visit the Coalition website at www.financialplanningcoalition.ca.

Yours truly,

Institute of Advanced Financial Planners

Lenore Davis, CFP, R.F.P.


A Matter of Trust: Protecting Candadians' Financial Futures

The Financial Planning Coalition

Canadians must be able to trust financial planners to help them achieve their financial well-being.

Studies have clearly demonstrated that Canadians are not getting the financial planning help they need, from qualified, professional financial planners. This is partially the result of a lack of understanding of how to identify a qualified financial planner and of what they should expect of a financial planner and/or a financial plan.

Today's unregulated financial planning environment leaves consumers vulnerable and at risk of receiving advice from individuals holding themselves out as financial planners but who have not had to meet any qualifications based on accepted, unified standards of ethics, competence and practice. The term "financial planning" is too often used as a sales pitch to sell product and the title "financial planner" is used haphazardly throughout the industry. The majority of those people in Canada who imply through title and/or advertising that they are financial planners are !n fact licensed and qualified only to give advice relating to product recommendations or purchase. An expertise in product advice gained from licensure does not equate to competence in financial planning. Nevertheless, studies have shown that consumers believe it does.

  • 92% - of Canadians have heard of the profession of financial planner.
  • 59% - of Canadians feel they do not have the necessary knowledge to adequately plan their financial future and admit they will need help planning their financial future.
  • 1/2 - Almost 1/2 of Canadians believe there are current regulatory standards for financial planners: (Proportion significantly higher among people with a higher household income ($lOOK and more) and people with a higher education (university diploma).1

Canadians remain confused and at risk. They expect, and have a right to expect, that anyone holding themselves out as a financial planner is qualified, competent, ethical and accountable for the advice that he or she is providing. In fact, in Canada, outside of Quebec anyone can call themselves a financial planner. There are no competency or ethics requirements or oversight mechanisms specifically for financial planners, other than through voluntary certification.

What's Stressing Canadians?

  • 87% of Canadians wish they had made better financial decisions earlier in life.
  • 45% of Canadians are embarrassed about their lack of control over finances.
  • 4 in 10 people in relationships with shared finances argue regularly over finances.2

Empirical Evidence Goes Well Beyond Wishful Thinking

There is no doubt that Canadians need the guidance of competent, professional financial planners. Study after study reveals the current societal challenges we face. An aging population has put great strain on our social safety nets; consumer debt levels continue to escalate; and gaps in workplace well ness programs have left our population in the most financially vulnerable and precarious positions that we have experienced in decades.

We know financial planning matters3

On-Track with Financial Affairs:

  • 81% - Comprehensive/Integrated Planning
  • 44% - No planning

Feel Prepared in Event of Unexpected Emergency:

  • 60% - Comprehensive/Integrated Planning
  • 28% - No planning

Feel Prepared to Manage Through Tough Economic Times:

  • 65% - Comprehensive/Integrated Planning
  • 36% - No planning

Feel On-Track to Retire When They Want To:

  • 50% - Comprehensive/Integrated Planning
  • 22% - No planning

Protecting Canadians' Financial Futures: The Solution

We need to ensure that consumers are appropriately served and protected by qualified and competent financial planners. Clear, singular standards of competence, ethics and practice must be accepted and permitted to be enforced.

The solution we propose is simple - codify in law the professional certification structure, governance and oversight mechanisms that already exist in practice, but that are currently voluntary for the 22,000 certified or licensed financial planners in Canada, and make them a requirement for all who wish to claim financial planning as their own.

  1. Adopt a single, unified set of standards for financial planners.
  2. Recognize and adopt the Canadian Financial Planning Definitions, Standards & Competencies - a joint publication of Financial Planning Standards Council (FPSC) and lnstitut quebecois de planification financiere (IQPF).
  3. Create title and holding out restrictions to only those who have demonstrated their competence by meeting a single set of unified qualification standards, ongoing professional ethics and continuous professional development requirements.
  4. Make financial planners accountable to a professional oversight body that understands financial planning and professional obligations and that represents the public interest.

    Such a model remains self-funded by professional financial planners and establishes no additional regulatory burden other than to require that all who claim to be financial planners meet and continue to meet the competency and ethical requirements expected of those who have stepped up to, and continue to adhere to, the unified standards already established by Financial Planning Standards Council (FPSC) and the lnstitut quebecois de planification financiere (IQPF).

Benefiting All

This model will benefit all stakeholders.

  • Consumers: with greater protections and clarity around what they should expect from a financial planner. Further, through participation in the planning process with a duly qualified individual, consumers will gain greater control of their financial futures and will be protected.
  • Provincial governments: from the adoption of greater consumer protection through a simple, proven, "no added cost" model.
  • Industry: through reduced compliance risk, assurance of consistency of quality delivery of financial planning and clear and simple direction regarding qualification requirements.
  • Existing regulators: by having the consumer protection issues related to financial planning addressed through a professional oversight model.
  • The financial planning profession: from the increased confidence placed in financial planners, and added credibility and clarity of their role as critical players in helping guide Canadians to a better financial future.

Take a Stand for Canadians

A professional model for financial planners, with a single unified set of standards of competence, practice and ethics regardless of what products the planner may or may not be licensed to sell, with standards established by experts who know and understand financial planning, administered through a governance structure that includes both practitioners and members of the public, will instill confidence in financial planning and financial planners.

Such a model will ensure that consumers working with a financial planner will be working with an individual who has met strict standards of care, competence, practice and ethics to help guide them to greater financial well-being.

Canadians deserve professional advice from qualified professionals. It's a matter of trust.

The Financial Planning Coalition was formed in 2009 to establish a framework for a profession for those holding themselves out as financial planners in Canada. The Coalition advocates for the official recognition of financial planning as a distinct profession that will best serve the interest of Canadians.

Its members include:

  • FPSC - Financial Planning Standards Council
  • IFPs - The Canadian Institute of Financial Planners
  • R.F.P. - Institute of Advanced Financial Planners
  • IQPF - Institut québécois de planification financière

Learn more at Financia iPianningCoalition.ca


[1] Leger, conducted on behalf of Financial Planning Coalition, AWARENESS AND PERCEPTIONS OF FINANCIAL PLANNERS IN CANADA, Jan. 2014 sample of 1,501 English or French-speaking Canadians, 18 years of age or older.

[2] Leger, conducted on behalf of FPSC, FINANCIAL PLANNING REPORT Fall, 2014; included more than 1,000 Canadians (excluding Quebec); margin of error of+/- 2.5%, 19 times out of 20.

[3] The Strategic Counsel, conducted on behalf of FPSC - 3 year logitudinal study: VALUE OF FINANCIAL PLANNING - Year 3 Report April - August 2012 surveyed the general English-speaking population in Canada (excluding Quebec).