: Vince Cerullo - Submission

August 28, 2015

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

Please accept the following submission addressing the questions in the initial consultation document.

Vince Cerullo
Financial Planning Specialist
4789 Owl Circle
Mississauga, Ontario
L4Z 2W2


Question 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.


The difference between financial planning and financial advice is that financial advice involves a stand-alone issue while financial planning is all encompassing. For example, a client with children may need advice regarding the setup of an RESP account for each of their children. This would be an example of financial advice. It has to do with one topic, in this case, the setup of a RESP accounts for their children.

On the other hand, financial planning would include all accounts that the client owns. They may own an RRSP, a non-registered account, a TFSA, etc. All accounts will need to be taken into account to make sure that their long-term goals are achievable, taking into account the cash outflow that is required to fund the RESP accounts.

The main activities within the scope of financial planning are to create an accurate net worth statement of the client today and create an accurate cash flow statement today that includes all cash inflows and outflows. Inflows are typically employment income, return on investments, rental income, etc. Outflows are typically living expenses, mortgage payments, travel expenses, etc. The last step is to project the net worth and cash flow statements out to the end of forecast period and determine if the financial goals can be met or if there is a shortfall.

Question 2

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


Yes, it is adequate at this point in time because the spectrum of responsibilities and job functions of individuals at different financial institutions is so wide that it is not practical to add more regulations. There individuals giving financial advice at full service brokerage firms all the way to the other extent, individuals opening bank accounts at your local branch.

Question 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?


The legal standard that should govern conflicts of interest and potential conflicts of interest should be kept very simple in order for the industry to work effectively. Individuals should disclose conflicts of interest to their clients before doing business. If this is not done, clients have the option of taking legal action against the individual and/or their employer or financial institution.

Question 4

To what extent, if at all, should the activities of those who engage in financial planning and/or giving financial advice be further regulated? Please consider the following in your response:

(a) Licensing and registration requirements;


There should be no licensing but individuals should need to register with the proper organization so that clients can quickly find the individual and lodge a complaint in a timely manner, if required.

(b) Education, training and ethical responsibilities;


Registration should include agreeing upon a certain level of standards and ethics. Education should be at the option of the individual. Clients will quickly determine if the individual has the proper financial expertise to assist them with their financial planning and advice.

(c) Titles and designations of individuals who engage in financial planning and/or the giving of financial advice;


Titles and designations again should be at the individual’s discretion. The more credentials an individual has, the more business they will, in theory, receive.

(d) Specific activities that should be included or excluded in a regulatory scheme;


The main activity in the regulatory scheme that should be included is that there should an adequate code of ethics to be followed and adhered to. The regulatory organization should not be overseeing the creation of financial plans and checking the accuracy of the numbers and calculations. If needed, the relevancy of those issues will be brought forward in a court of law.

(e) Costs and other burdens of regulation;


The cost of registration with the appropriate organization should be the burden of the individual. Of course, the cost should be reasonable as compared to other similar organizations.

(f) Regulation of compensation; and


There should not be regulation of compensation. The only regulation should surround the disclosure of conflicts of interest or potential conflicts of interest. The market will determine a fair price for the services offered.

(g) Complaints and discipline mechanisms.


Complaints and discipline mechanisms should be under the control of the regulatory
organization. If required, the complaint should be escalated to the court of law.

Question 5

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


The main harm that consumers experience in the current environment is the lack of disclosure of compensation and conflicts of interest. Compensation is not disclosed adequately today. Most rational consumers are comfortable with paying a fair dollar for a fair service. Conflicts of interest are also abundant. For example, advisors will sometimes attain additional compensation, besides monetary, if a certain mutual fund is purchased.

The main benefit that consumers experience in the current environment is that there is no lack of advisors in the market with the expertise that they need on any particular financial issue.

Question 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?


Yes, consumers should have access to a central registry. The use of the internet today for these types of purposes is simply the norm.