: Philip Howe - Submission

September 4, 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, ON M7A 1Z1

Dear Committee Members,

This letter is being submitted to you to request alternatives as outlined below.

Consumers want to work with professionals and to have assurance that they can trust the person who is providing their financial advice. It is encouraging that you are addressing the need to professionalize the financial advice industry.

Having been an insurance advisor for almost 42 years, and a member of Advocis, The Financial Advisors Association of Canada (and its predecessor organizations), I voluntarily adhere to a code of professional conduct and ongoing continuing education as well as to answer to a disciplinary process. Regrettably, less than 15 per cent of 45,000 financial advisors in Ontario choose to belong to Advocis and commit to these higher standards.

Currently, there is no regulation of the terms financial advisor or financial planner. Anyone can hold out as a financial advisor or financial planner. This means consumers may be at risk. A solution addressing this issue has to capture all financial advisors inclusive of planners as one profession.

Financial advisors, regardless of the license they hold (mutual funds under the MFDA, securities under IIROC, or life insurance under FSCO), are required to conduct some form of financial planning in order to provide clients with sound advice.

Some industry groups believe that financial planners should be regulated separately from financial advisors, and that the financial advice industry should follow the example of the healthcare industry where doctors and nurses are both regulated, but separately. This is not the right approach. Using the healthcare analogy, financial advisors and planners should be grouped together- the financial advisor is the general practitioner (GP) and someone with a financial planning specialization is the specialist such as a cardiologist. Just as cardiology is a specialization in the medical profession, financial planning is one of the specializations in the financial advice industry.

If one were to visit a GP and express specific symptoms outside the scope of that GP's expertise, the GP would likely refer that person to a specialist. Both practitioners are part of the same profession. The only difference is that one has advanced training and skill in a certain area of medicine.

Financial advisors are heavily regulated by multiple regulators across various financial sectors. The current process is complex and does not address the actual concerns and problems that have been identified. Anyone can call themselves a financial advisor who observes inconsistent standards of practice and conduct with no formal recognition of professional designations.

Only through the establishment of an overall profession of financial advisors can these issues be overcome. This means that the oversight of financial advice must shift to professionals in the industry to regulate itself, like every other profession in Ontario.

To establish a financial advisor profession, a governing body would be responsible for regulating advisors' conduct and proficiency. However, this would not alter the product-based regulation that currently exists for financial institutions and product manufacturers.

As a financial advisor, I believe that the best way to create a profession for all financial advisors is through the establishment of a professional body where advisors would be overseen by a subset of my peers and members of the public who understand the industry and who have a vested interest to ensure that professional standards are upheld.

This change would create less red tape, remove duplication, reduce costs, increase professional standards, and result in less confusion for advisors and consumers.

In addition, there are currently products that can be sold without a license - incidental insurance for instance. The professional body that would oversee the conduct and proficiency of financial advisors would also be able to ensure that financial advisors involved in selling such products are properly trained to perform these activities. This oversight will provide greater consumer protection without upsetting the current market structure.


Philip Howe, CLU, CFP, CH.F.C.