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All members of the new Financial Planning Association of Canada will sign a pledge to act as a fiduciary, at all times, on behalf of their clients and disclose all compensation and costs in clear and transparent terms.

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The launch of the Financial Planning Association of Canada (FPAC) on Nov. 19 is another positive step in the continued evolution of turning financial planning into a recognized profession.

When various players within the investment industry were contacted about the establishment of this new association, their first questions were always: “Why do we need another association?” and “How will it be different?”

In response, we would point out the following: Imagine there was a service that, at its best, provided those receiving it with a sense of security, welfare, freedom, and calm – and enabled them to achieve their goals and dreams in life.

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Now, picture that the majority of people providing this service were subject to deficient proficiency requirements. They could give themselves whatever title they wanted. They had no legal requirement to act in the best interests of their clients. They were incentivized primarily by selling products that may not be needed or beneficial to a client. They had no incentive beyond their own conscience and sense of benevolence to do what’s best for the client. They were faced with requirements from their employers to meet weekly or monthly targets. And they only had to provide cursory and often incomplete disclosures about their compensation for acting on behalf of the client.

Given these deficiencies, the unfortunate state of financial planning today is no surprise: surveys show that only one in five Canadians would rate financial planners as trustworthy.

The profession of financial planning in Canada is young, growing out of the process of selling financial products in the mid-20th century. In contrast to the medical, legal and accounting professions, which have had hundreds – if not thousands – of years to evolve into their current, well-developed systems, financial planning has yet to develop an equivalent ecosystem. Many of us are simply not willing to wait that long to see that ecosystem develop in Canada.

That’s why the FPAC was born. More than 100 financial planners and industry participants have come together from across Canada as the inaugural members of this new association. They reject the status quo and have taken on the mission to evolve the financial planning industry into a profession of highly-qualified professionals who have the highest ethical and fiduciary standards and who are focused on bettering the lives of their clients.

Unlike other associations that organize primarily around values, the FPAC is organized around values and a clearly defined end state. The FPAC’s charter doesn’t leave room for interpretation of the world its members are trying to create; that mission is spelled out clearly.

Policy objectives have been codified into the charter, which outlines the desired future: the delivery of complete, transparent disclosure; compensation reform; higher standards of competency; a requirement to deliver evidence-based advice; and, most importantly, a legally enforced fiduciary standard.

For members of the FPAC, that future begins today. The association spells out a current standard exceeding those imposed by any association, designating body or regulator in Canada. This standard will be increased over time until the end state is achieved.

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Financial planners who sign up to be members will be expected to meet the current standard within 24 months of joining. The current standard focuses on a handful of key areas including:

  • All members will sign a pledge to act as a fiduciary, at all times, on behalf of their clients effective immediately.
  • They will adopt an evidence-based approach to all recommendations.
  • Members will disclose all compensation and costs to the client in clear and transparent terms.
  • They will be committed to the development of financial planning by volunteering 10 hours a year in one of various capacities.

Jason Pereira, partner and senior financial consultant at Toronto-based Woodgate Financial Inc.

Woodgate Financial Inc.

Beyond just setting standards of conduct, the FPAC plans to help its members, at all levels of career development, to live up to the association’s standards and to develop practices that will be capable of providing better services to their clients.

Although only basic resources are available at launch, we are committed to developing a continuously updated best practices portal; provide how-to guides written by financial planning experts on various concepts; deliver evidence-based analyses of financial planning strategies; and hosting a member forum for peer collaboration.

One thing the FPAC will not be doing is issuing its own designations. The certified financial planner, its equivalent in Quebec and the registered financial planner designations are already established. Instead, we will look to work in collaboration with all of their issuing bodies toward our shared goals.

The FPAC’s goals are ambitious, but we also realize that this change will not happen overnight. It will depend largely on financial planners who feel like we do: that the time has come to evolve what it means to be a financial planner in Canada; to step up and join us in our efforts; and to donate their time and knowledge to the cause.

To that end, principled professional financial planners should visit the FPAC’s website and take the time to review the charter. This is your opportunity to create a better future.

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Jason Pereira is partner and senior financial consultant at Woodgate Financial Inc., a financial planning firm under the IPC Securities Corp. umbrella in Toronto. He is also president of the Financial Planning Association of Canada and a three-time winner of PlanPlus Inc.’s Global Financial Planning Award.

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