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Investment industry job-title guidelines don’t go far enough: Critics

Japanese job-hunting students dressed in suits practice swapping business cards during a business manners seminar at a placement centre in Tokyo May 28, 2012.

Toru Hanai/Reuters

New guidelines about the job titles that can be used by people working in Canada's financial industry are not reassuring to advocates from within professional ranks, who are pushing for greater consistency and clearer labelling.

The Investment Industry Regulatory Organization of Canada – Canada's brokerage industry regulator – published new guidance Monday after years of review, urging companies to adopt more consistent and clear titles for their employees so that clients understand their qualifications to help them with investments.

The guidelines are intended to address the abundant use and misuse of job titles such as financial adviser, financial planner and wealth consultant, which can be used by anyone regardless of their training or experience. The policy also urges companies to stop allowing people to use inflating terms such as "senior," "director," and "vice-president" when they give a misleading impression of an employee's stature or role in a firm.

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In an industry where half the employees seem to be at least a vice-president, if not a senior director, adhering to the latter guidance alone would lead to a welcome clarification of job titles.

IIROC chief executive officer Susan Wolburgh Jenah said the regulator will encourage firms to "embrace and implement" the guidelines as best practices.

"This will improve transparency and increase clarity and understanding on the part of investors about the services registrants are trained to provide and the skills and experience that underlie the title," she said in a statement Monday.

The concern for some, however, is that IIROC's latest notice is neither binding nor specific. The new notice urges companies to adopt their own internal standards for job titles to ensure they are clearer and more accurate, but does not offer detailed criteria about how most titles should be used, and it does not require the same terms to be used consistently across different firms.

IIROC says it is using a principles-based approach to regulation that relies on individual companies to develop their own appropriate response. But that open-ended stance leaves some organizations that are trying to promote higher professional standards in the financial sector with concerns. They worry companies will continue to use titles as they prefer, maintaining the existing discrepancy among firms.

Cary List, chief executive officer of the Financial Planning Standards Council, which oversees the use of the Certified Financial Planner (CFP) designation in Canada, said he is less concerned that firms may continue the rampant practice of using inflated business titles such as vice-president, and more concerned about the continued use of titles that mislead investors about an employee's professional training.

A CFP, for example, must spend years taking university-level courses in finance and must write a series of professional exams to earn the designation. But anyone can use the term "financial planner," Mr. List says, even if he or she is simply a salesperson offering no expertise in broader financial planning.

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What's worse, Mr. List says, is that his organization has found three out of four investors they have surveyed who say their adviser is a certified financial planner are in fact mistaken, and that he or she has no such official designation. For that reason, his organization made a submission to IIROC last year, urging the regulator to define how certain terms can be used.

"Our concern is that saying to the firm, 'You should decide,' means that depending on the firm the decision will have been completely different from firm to firm," Mr. List said Monday. "If we're recognizing that these titles are really as a consumer guide, we should have strict requirements and regulations around who can call themselves what."

Canada's Chartered Financial Analyst (CFA) organizations shared a similar concern. The Canadian Advocacy Council for the Canadian CFA Institute Societies also made a submission recommending IIROC should limit the choices of titles that firms can use and outline a smaller number of clearer job categories.

Robin Pond, a member of the Canadian Advocacy Council, said the investing public need to be understand who they are dealing with when they see a title on a business card.

"At the moment, every type of title can be used by anyone, essentially – and it can get quite creative," Mr. Pond says.

Mr. Pond said IIROC's new rules are a "good start" but they may need to become tighter if nothing changes, because investors are not going to "spend their lives" learning what various titles mean at each firm.

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"It's obviously going to get caught up in the marketing of the individual firms if there aren't fairly strict guidelines outlining who can call themselves what," he warns.

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About the Author
Real Estate Reporter

Janet McFarland is the real estate reporter for The Globe and Mail’s Report on Business, with a focus on residential real estate trends. She joined Report on Business in 1995, and has specialized in reporting on corporate governance, executive compensation, pension policy, business law, securities regulation and enforcement of white-collar crime. More

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