: Mutual Fund Dealers Association of Canada

September 8, 2015

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

Re: FINANCIAL PLANNING/ADVICE CONSULTATION

Dear Sirs/Mesdames:

The Mutual Fund Dealers Association of Canada (“MFDA”) thanks the Ontario Ministry
of Finance for this opportunity to present our views on the regulation of financial
planning and financial advice in Ontario.

Background

The MFDA is the national self-regulatory organization that oversees mutual fund
dealers in Canada. MFDA Members are mutual fund dealers that are licensed with
provincial securities regulatory authorities. MFDA Members administer
approximately $632 billion in assets and sponsor 82,000 Approved Persons
(partners, directors, officers, compliance officers, branch managers, employees and
agents of the dealer who are subject to the jurisdiction of the MFDA). MFDA
Members are responsible for managing a significant portion of the Canadian wealth
management landscape overseeing more than half of the over $1 trillion mutual fund
assets in Canada. MFDA Members primarily service mass market retail clients who
represent approximately 80% of Canadian households.

The MFDA is responsible for regulating the operations, standards of practice and
business conduct of its Members and their Approved Persons with a view to enhancing
investor protection and strengthening public confidence in the Canadian mutual fund
industry. MFDA Members and Approved Persons are required to adhere to
comprehensive requirements with respect to business conduct, know your product, know
your client, suitability, marketing and advertising, conflict of interest and outside
business activity. MFDA Members are subject to extensive sales and financial
compliance reviews which cover every aspect of the Member’s operations. When it
becomes apparent through compliance reviews or investor complaints that standards have
not been met, the Member and Approved Person may be subject to discipline through
enforcement proceedings which may result in fines, suspensions or permanent
prohibitions. The MFDA’s jurisdiction covers compliance with specific MFDA Rules, such as Rule 2.1.4 which requires Members and Approved Persons to ensure that conflicts
of interest are addressed by the exercise of responsible business judgment influenced only by
the best interests of the client, as well as adherence to general standards of conduct
including dealing fairly, honestly and in good faith with clients, observing high standards
of business conduct, complying with securities legislation applicable to Member business
and acting in the public interest.

MFDA Regulation of Financial Planning Activities

The jurisdiction of the MFDA is not limited to regulating product sales. The MFDA
regulates the advice provided by Members and their Approved Persons to clients in
relation to their accounts.

In the course of providing advice in relation to client accounts, many Approved
Persons of MFDA Members engage in activities that may be considered financial
planning in nature. These activities are part of the advisory process and subject to
MFDA oversight. Such advice may include general asset or portfolio allocation
advice, aspects of tax planning or estate planning. Many Approved Persons of
MFDA Members hold financial planning designations such as the Certified Financial
Planner (“CFP”), Personal Financial Planner (“PFP”), Registered Financial Planner
(“RFP”) and Financial Planner (“FPI”).

MFDA Proposed Rule Amendment

We understand that there is currently confusion among the investing public with
respect to the use of the title “Financial Planner”. The MFDA is currently
considering Rule proposals that would prohibit Approved Persons from using the
title “Financial Planner” unless they have appropriate proficiency. On September 6,
2015, the MFDA issued a consultation paper for public comment to request feedback
on appropriate proficiency standards for Approved Persons of MFDA Members who
use the title “Financial Planner”. A copy of the MFDA consultation paper is
attached to this letter.

Additional Action

We support the objective of standardizing proficiency requirements and establishing
minimum standards for individuals who use the title “Financial Planner”. However,
we urge that any new approach to financial planning regulation consider existing
regulatory regimes in order to avoid the application of and the potential for
duplication and overlap of regulatory efforts.

Paige L. Ward
General Counsel, Corporate Secretary & Vice-President, Policy

MFDA Consultation Paper on Standards for Use of the Title “Financial Planner”

September 2015

Introduction

For a number of years, the regulation of financial planning has been a subject of debate by
regulators and governmental agencies. Concerns have been raised by investor advocates and
industry associations that, in most provinces of Canada, individuals can use the title “Financial
Planner”, without having to meet any minimum proficiency standards. As a result, there is
significant potential for investors to be misled as to the qualifications of any individual using this
title.

Purpose

The purpose of this Consultation Paper is to solicit feedback from stakeholders on the MFDA’s
proposal to establish proficiency requirements for Approved Persons who use the title “Financial
Planner”. As background for considering this issue, this Paper sets out: relevant details
respecting the current regulatory landscape, existing MFDA Rules regarding the use of business
titles, and financial planning designations currently being used by Approved Persons.

Individual submissions received will not be made public. However, at a later date, following the
close of the comment period, a summary of comments received will be published. Comments
should be submitted in writing to Ken Woodard, Director, Communications and Membership
Services at kwoodard@mfda.ca. The deadline for comments is December 4, 2015.

Part 1. Background

1.1 Current Regulatory Landscape

At the national level, there is currently no regulatory body that exercises oversight in respect of
financial planning titles. The province of Quebec has established minimum proficiency
standards for individuals operating in the province who use the title “Financial Planner”. The
government of Ontario has also recently launched an initiative to explore regulatory changes in
this area. The Financial Planning Coalition, an organization comprised of various financial
planning associations, has developed a proposal to regulate financial planning, which includes
the establishment of minimum proficiency standards. Further details in respect of these matters
are discussed below.

Quebec

The Institut Québécois de planification financière (“IQPF”) was created by the Government of
Quebec, in 1989, with the adoption of Bill 134 - An Act Respecting Market Intermediaries.
Subsequently, in 1998, the Quebec government adopted Bill 188 – An Act Respecting the
Distribution of Financial Products and Services, which replaced Bill 134. Bill 188 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.
To receive the Financial Planner (“FPI”) designation granted by the IQPF, an individual must
satisfy prescribed academic requirements (i.e. a personal financial planning university program approved by the IQPF), complete the IQPF’s Professional Training Course1 and pass the IQPF
exam.

In Quebec, financial planners are regulated by the Chambre de la Sécurité Financière, a selfregulatory
organization that exercises disciplinary powers and oversight in respect of individuals
practicing in five sectors and registration categories, including financial planning.

Ontario

In Ontario, the Minister of Finance recently launched the Expert Committee to Review
Regulation of Financial Advisors and Financial Planners. The purpose of this review is to
consider the general regulatory framework for financial advisors and financial planners. The
expert committee is expected to complete its review in early 2016 and submit a final report,
including recommendations, to the Government of Ontario.

Financial Planning Coalition – Proposed Regulatory Framework

The Financial Planning Coalition was formed in 2009. The purpose of this organization is to
advocate on behalf of and, ultimately, establish a framework for the formal recognition of
financial planning as a distinct profession in Canada. Members of the Financial Planning
Coalition include: the Canadian Institute of Financial Planners (“CIFP”), the Institute of
Advanced Financial Planners (“IAFP”), the IQPF and the Financial Planning Standards Council
(“FPSC”).

On June 15, 2015, the Financial Planning Coalition released a proposed framework for the
official establishment of financial planning as a profession in Canada. In its proposal, the
Coalition calls on provincial governments to codify in law existing, but voluntary, professional
certification structures, governance and oversight mechanisms. In addition, the proposal sets out
certain recommendations, including the following:

  • Adopt a single, unified, set of standards for financial planners;
  • Formally recognize and adopt the Canadian Financial Planning Definitions, Standards &
    Competencies (a joint publication of the FPSC and IQPF);
  • Create title and holding out restrictions that would apply to those who meet a unified set
    of qualification standards and ongoing requirements in respect of professional ethics and
    continuous professional development; and
  • Make financial planners accountable to an oversight body that acts in the public interest.

1.2 MFDA Rule 1.2.1(d) – Business Titles

MFDA Rule 1.2.1(d) prescribes requirements in respect of the use of business titles, including
those designations/certifications used by Approved Persons holding themselves out as financial
planners. Rule 1.2.1(d) provides as follows:

No Approved Person shall hold him or herself out to the public in any manner including, without
limitation, by the use of any business name or designation of qualifications or professional
experience that deceives or misleads, or could reasonably be expected to deceive or mislead, a
client or any other person as to the proficiency or qualifications of the Approved Person under
the Rules or any applicable legislation.

1.3 Use of “Financial Planner” title by MFDA Approved Persons

Many Approved Persons of MFDA Members hold financial planning designations such as
Certified Financial Planner (“CFP”), Personal Financial Planner (“PFP”) and Registered
Financial Planner (“RFP”). Attached as Appendix “A” to this Paper is a table that provides
additional information in respect of the more commonly used financial planning designations.
In addition to the titles noted above, there are other designations generally in use by individuals,
who may be involved in aspects of financial planning. Such designations include, for example:
Chartered Investment Manager (“CIM”), Certified International Wealth Manager (“CIWM”),
Fellow of the Canadian Securities Institute (“FCSI”), Member, Trust Institute (“MTI Estate and
Trust Professional”), Financial Management Advisor (“FMA”) and Chartered Strategic Wealth
Professional (“CSWP”).

Part 2. Request for Feedback

The MFDA is considering amendments to Rule 1.2.1(d) that would establish minimum
proficiency requirements for Approved Persons seeking to use the title “financial planner”. Input
is specifically requested in respect of the questions set out below.

Questions

1.
  1. In Appendix “A”, we have set out some of the more commonly used financial
    planning designations. Input is sought, in particular, as to whether these
    designations would be appropriate for the purpose of meeting the MFDA’s
    proposed proficiency requirements;
  2. Where commenters, in their response to 1(a), identify a designation as being
    appropriate, they are asked to also supply reasons in support of their selection
    (e.g. the designation is subject to course work, exam requirements, related work
    experience, continuing education requirements, etc.);
  3. Comment is also sought as to what other designations might be appropriate for an
    individual seeking to use the title “Financial Planner”.
2.
  1. Should amendments to Rule 1.2.1(d) include a grandfathering provision?
  2. Where commenters, in their response to 2(a), indicate that such a provision should
    be included, they are also asked to identify the criteria that should apply (e.g. grandfathering based on prior work experience and/or credentials/designations
    held by the individual, etc.).

Appendix “A”

Set out below, is a chart that summarizes commonly used financial planning designations and
related information.

Acronym Designation Issuing
Organization
Prerequisites/
Experience
Required
Continuing
Education (“CE”)
Requirements
CFP Certified
Financial Planner
Financial Planning
Standards Council
Y Y
FPl Financial Planner Institut Québécois
de planification
financière and
AMF
Y Y
PFP Personal
Financial Planner
Canadian
Securities Institute
Y Y
RFP Registered
Financial Planner
The Institute of
Advanced
Financial Planners
Y Y

 

1 The IQPF Professional Training Course is a 54 hour course of study that is taken over nine weeks.