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rob carrick

When the financial advice business in Canada grows up, what does it want to be?

A new group called the Coalition for Professional Standards for Financial Planners offers a clue. As a first step toward making planning a true profession, it wants to establish a set of credentials that would define what a financial planner is.

May the force be with you, my coalition friends. Never has an industry needed to grow up like the financial advice biz.

People who want help with financial matters as opposed to doing things themselves have this selection of providers to choose from:

-The financial adviser: Sells investments, may or may not provide advice.

-The investment adviser: See above.

-The financial planner: Ditto.

-The financial planning consultant: Ibid.

-The wealth manager: Guess.

You could add retirement planner, broker and investment dealer to this list of empty titles that are used interchangeably and thus have no real meaning from the end user's point of view.

How would a mature financial industry look? One idea would be for there to be two windows for people who choose not to look after their money themselves. The first would be for financial planners who provide comprehensive advice and likely sell investments as well. The second would be for investment salespeople who just help people buy mutual funds, stocks and other products.

The coalition is a long way from saying anything that specific about financial advice. Right now, it's developing a statement of principles that will help establish national standards for those who would call themselves financial planners.

Credentials? What Credentials?

Did you know that anyone in most provinces and territories can claim to be a financial planner without any qualifications or supervision?

The coalition should certainly shut that loophole, but a lack of proper accreditation is much less of a problem than fully accredited people who whose sole modus operandi is to sell, not advise. Anyway, ensuring standards for planners won't keep the crooks out. Earl Jones ripped off his clients in the province of Quebec, the one jurisdiction with rules on who can be called a financial planner.

The far bigger issue for the coalition to tackle is getting financial planners on roughly the same professional footing as accountants, engineers, lawyers and doctors. In other words, create a standard of providing client-focused expertise that is subject to tough and well-policed rules of conduct.

Call It What It Is

Oh yeah, another step would be to standardize the name of the profession. Notice that we don't have accounting consultants, accounting planners and accounting advisers. We just have accountants. There are different accounting designations, but the way you know someone is a serious professional is they are called an accountant.

There are already professional-grade advisers out there, but it's challenging to find them. While we wait for all planners to become professionalized, use these five questions to find an adviser as opposed to a sales person:

1. What, besides selling investments, do you do for clients?

The adviser should create a personalized, holistic financial strategy that will put you on track toward a financially comfortable retirement while keeping on top of other matters, such as your debt levels, savings for your kids' education, estate planning, taxes and maybe insurance.

2. Do I get a written financial plan?

The answer should be yes, with the proviso that clients with simpler needs get simpler plans.

3. Can I see one of your financial plans?


4. May I speak to some of your existing clients to talk about how your planning expertise has made a difference for them?

Good advisers have their references all queued up.

5. How do you charge for your services?

Flat rates or hourly fees are how professionals in many other fields charge, but you may encounter planners who charge an annual fee of 1 to 2 per cent of your investment holdings, or who charge through commissions on products.

Financial planners aren't the saints of the financial industry, nor will they become so in the future if they emerge as a true profession. And neither are people who sell investments the villains. What's wrong with the financial industry now is that investors can't tell who does what. Turning financial planning into a profession is the answer to that.


The Coalition for Professional Standards for Financial Planners is trying to develop national standards for financial planners. Here are the groups that make up the coalition:

Canadian Institute of Financial Planners

Represents advisers who have the certified financial planner designation (CFP).

Financial Advisors Association of Canada (known as Advocis)

An adviser organization with many members drawn from the insurance industry.

Financial Planning Standards Council

Sets standards for the CFP.

Institute of Advanced Financial Planners

Administers the registered financial planner (RFP) designation.

Institut québécois de planification financière

Sets rules for financial planners in Quebec.