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Regulator pushes Canada toward a clearer definition of ‘financial planner’

At the national level, there is currently no regulatory body that exercises oversight of financial planning titles, according to a Mutual Fund Dealers Association bulletin.


Canada's mutual fund regulator is forging ahead with plans to regulate the use of the title "financial planner" in hopes of clarifying for investors whether advisers are up to snuff.

At the national level, there is currently no regulatory body that exercises oversight of financial planning titles, according to a Mutual Fund Dealers Association bulletin. Last fall, the MFDA published a consultation paper on whether there should be regulatory standards for advisers looking to use the title financial planner. After a mandatory comment period, which ended on Dec. 4, the regulator is now looking at ways to standardize the use of the title among mutual fund representatives.

"We didn't think our current regulatory rule on financial planning really made sense and decided it was time to address one of the main concerns that was raised by both the public and the industry, which was minimum proficiency standards by any individual using the financial planner title," said Karen McGuinness, senior vice-president of member regulation and compliance for the MFDA.

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During the comment period, the regulator received numerous responses across the financial community, including those from financial advisers, investment firms and industry associations, and found that the majority of commentators expressed support for the certified financial planning (CFP) designation as being a key required proficiency. The CFP is administered by the Financial Planning Standards Council (FPSC) and is held by approximately 17,000 financial advisers in Canada, as well as an additional 4,500 financial planners in Quebec (through Institut québécois de planification financière, or IQPF).

In addition to the CFP, responses noted that designations that generally focus on comprehensive planning and have educational and examination requirements, a code of ethics and practice standards could also be considered, such as: registered financial planner (RFP) and personal financial planner (PFP).

A number of commentators also suggested an adviser with the chartered life underwriter (CLU) designation would be appropriate for an individual seeking to use the title financial planner, but that they must also achieve a CFP designation.

But the MFDA are not the only ones leading the push for reform.

The province of Quebec has established minimum proficiency standards for individuals operating in the province who use the title financial planner, while the Ontario government announced last year that it would be setting up a committee to explore a number of issues related to financial planners, including titles and designations. As well, the Financial Planning Coalition, an organization comprising various financial-planning associations, has also developed a proposal to regulate financial planning.

The MFDA has consulted with the Ontario government, as well as reviewed Quebec's existing requirements to ensure consistency.

But multiple groups exploring the issue could potentially be confusing for the industry if requirements end up being conflicted, said Cary List, chief executive officer of the FPSC.

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"We have asked the MFDA to consider holding off until the Ontario government releases its recommendations, and also have urged the MFDA not to bring the requirements down to the lowest common denominator, as this would not serve the consumer interest," Mr. List said. "We prefer a solution which is broader in reach that would include all financial planners, to ensure a consistent approach to qualifications, to avoid creating further public confusion."

Bob White, president of Group One Planning Solutions Ltd. in British Columbia, disagrees with the involvement of the MFDA in any capacity and said it is not their role to oversee the use of the financial planning title, as it goes beyond their area of expertise.

"The MFDA regulates a product and a financial planner offers so much more than just mutual funds," said Mr. White, who is a certified life underwriter (CLU) and uses the title financial planner. "Financial planners look at a number of needs including investments, insurance, segregated funds, pension products as well as estates and tax-planning needs. So really, how can the MFDA regulate something it knows nothing about?"

Ms. McGuinness denied they are not qualified to be looking at the issue.

"If you hold yourself out to being a financial planner, then you should meet minimum proficiency requirements and we are responsible for regulating the business of our members and activities of approved persons, " she said.

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