Planning advocates push professionalism

By Steven Lamb | October 6, 2010 | Last updated on October 6, 2010
3 min read

The advancement of financial planning as a respected profession has taken a significant leap forward, as turf-battles over who should be the gatekeeper of the title have taken a backseat to promoting it to the public.

“More organizations, associations and regulators than ever before are working together in recognition that no single group can make real positive change in the professional landscape of financial planning advice,” said Cary List, president and CEO of the Financial Planning Standards Council.

Speaking at a Financial Planning Week event in Toronto, he praised Advocis, the Canadian Institute of Financial Planners, the Institute of Advanced Financial Planning, the Federation of Mutual Fund Dealers, Quebec’s Institute of Financial Planning, IIROC and provincial regulators.

Working together, the various stakeholders have developed a vision for where the industry will be in 10 years time.

In its Vision 2020 document, the FPSC has laid out five key goals:

‡ every high school curriculum include introductory financial planning courses;

‡ regulatory restrictions on who can call themselves financial planners; the industry promoting and distinguishing the value of financial planning,

‡ separate from product-related advice;

‡ the public understanding the difference between planning and product advice; and

‡ that there be sufficient duly-licenced financial planners to provide all Canadians with advice on reaching their goals.

Financial planning is already a distinct professional activity, according to panelist Michael Lem, who received the FPSC’s 2010 Donald J. Johnston Award. The industry is gradually heading towards public recognition as a profession.

There are still hurdles facing the industry before it can truly be identified as a profession, however.

“Financial planning is on that continuum toward becoming a fully respected profession, the same way doctors and lawyers are professionals,” he said. Already he sees several similarities to the accounting profession, which also faces challenges – there are three “home-grown” designations for accountants in Canada, but none of them are required for a practitioner to hang their shingle as accountants.

“Financial planning becomes a profession, not when all of us who are involved in it think it is, but when the public recognizes it,” said Kevin Keller, CEO of the CFP Board in the U.S. “At least in the U.S., I don’t think we’re there. We’re having the same discussion as you are here… but there is no regulation of financial planner as a profession.”

Currently, only one province has regulated the title “Financial Planner”, with the Institut québécois de planifcation financeère (IQFP) serving as the gatekeeper for the title. But while the IQFP is the only body that can bestow the title, it is currently powerless to strip a planner of the designation.

“One of the reasons we are pushing for this kind of recognition as a profession is to be able to monitor and make sure that the advice given, in the long run, is good,” said Martin Dupras, chairman of the IQFP board. “The public would be better served with this recognition, because, in the long run, we could get rid of the people giving bad advice.”

Susan Wolburgh Jenah, president and CEO agrees that any organization that bestows a professional designation must be able to enforce its standards of conduct, as the designation provides the public with a sense of security – in essence, the governing body has issued a stamp of approval on anyone carrying their designation.

But she pointed out that there are already regulatory mechanisms in place to discipline the industry’s bad apples.

“We do have the ability to deal with those who give bad advice, in the sense that that bad advice translates into advice with respect to product purchases,” she said. “To the extent that you have a financial plan that has no investment advice being offered in connection with it, I would suggest that may be quite a rare event.”

Dupras countered that it is entirely possible that a planner could give terribly damaging advice, but place the client in a perfectly acceptable product.

“The financial planning advice might come before the sale of product, so you could have the situation of bad advice being given, but a good product is sold,” he explained. “Should I keep my defined benefit pension, or transfer it? In some cases it would be a mistake to transfer it, but if I do so and I invest it in the best possible product, it is still a mistake, but there was no mistake in the distribution of the financial product.”


Steven Lamb