: William Hinan - Submission

September 17, 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

Dear Expert Committee Members:

As a Financial Security Advisor, I am submitting this letter to the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives.

Consumers want to work with professionals. They want assurance they can trust the person who is providing their financial advice. I have been a Financial Security Advisor for over 36 years and I'm encouraged that you are addressing the need to professionalize the financial advice industry in Ontario.

Also, I am a proud and active member of Advocis. As a member I voluntarily choose to belong to this Association, adhere to a code of professional conduct, obtain continuing education requirements that exceed those of the regulators and be subject to a disciplinary process. Founded in 1906, Advocis, The Financial Advisors Association of Canada, is the oldest and largest voluntary professional membership association of financial advisors and planners in Canada. The problem is there are 5,000 members of Advocis in Ontario and over 40,000 advisors across the province. Not all advisors adhere to the standards established by Advocis. I fully support the overall direction my Association is taking on the professionalization of all financial advisors.

Currently, the terms financial advisor or planner are not protected in regulation or legislation. Anyone may hold themselves out as a financial advisor or planner. This means consumers are at risk. Financial advisors and planners are the two most common titles consumers associate with as practitioners that deal with their financial needs. I feel strongly that any solution addressing this issue has to capture all financial advisors inclusive of planners as it is one integrated profession.

Some groups believe that financial planners should be regulated separately from financial advisors as though there is a complete separation of these groups. The fact is, financial advisors, regardless of the license they hold (life insurance through FSCO, or mutual funds and securities under the MFDA or II ROC}, conduct financial planning in order to provide clients with sound advice. A very small fraction of planners actually make their living selling financial plans to clients. The vast majority of planners are compensated through the placement of life insurance and securities products with their clients. I am in favour of recognizing specialist designations as long as they meet the high standards established by the profession. However, carving out financial planners does not make any sense and will create the problems the government faced for years as it tried to amalgamate all accountants with various designations and titles under one umbrella. We need to get this right from the beginning to avoid problems experienced in other professions. Everyone needs to be under the tent.

Financial advisors are heavily regulated by multiple regulators across the various financial sectors. The current process is complex and does not address the actual concerns and problems that have been identified:

  1. Anyone being able to call themselves a financial advisor.
  2. Inconsistent standards of practice and conduct.
  3. No formal recognition of professional designations.
  4. The ability of an individual who has been disciplined in one sector to move to another virtually unhindered.

Only through establishing an overall profession of financial advisors will these issues be overcome. This means that the oversight of financial advice must shift to the Professional Association in the industry, to regulate itself, like every other profession in Ontario. By establishing a financial advisor profession, the governing professional body would be responsible for regulating advisor conduct and proficiency, but would not alter the product-based regulation that currently exists for the financial institutions and product manufacturers.

As a financial advisor, I believe that the best way to establish a profession for all financial advisors is through the establishment of a professional body where I would be overseen by my peers who understand the industry and have a vested interest in ensuring that we all uphold professional standards. In my opinion, the details on how this is accomplished should be decided by the profession. However, I believe that the standards established by Advocis should be recognized under a new framework as that Association has a century-old track record regarding practice standards and professional designations. This approach would result in less confusion for advisors and consumers. Less red tape would remove duplication, reduce costs and increase professional standards and consumer protection.

As a Financial Security Advisor, I need to know that the scope and title of my profession are protected and that others, who hold themselves out as financial advisors, must operate at the same high standard that I has built my business.

Sincerely,

William B. Hinan, CFP, CLU, CH.F.C.
Financial Security Advisor