What’s in a Title?

Regulating the Use of Financial Planner or Financial Advisor

If someone were to tell you that they were a financial planner or a financial advisor, what would be your first thought? Mutual fund salesperson? Or perhaps, life insurance salesperson? Before I became involved in financial services myself, the people I met with those titles were staff at a bank branch. A financial advisor at a bank will indeed recommend mutual funds – but only those that are part of that bank’s brand. Depending on the scope of the job, they may also recommend mortgages, lines of credit, or other options for borrowing money. In order to sell mutual funds, the advisor will have to obtain a licence, which can be obtained by passing a course.

 

A financial planner is a kind of financial advisor, but the term planner suggests a broader mandate than the sale of a financial product. In addition to selling products, a planner generally also provides a program for the customer to meet long-term financial goals.

 

(Note: Not all financial planners sell products or make product sales the main part of their business. Some come with credentials (QAFP™, CFP^®, R.F.P.^®) representing significant study and adherence to professional practice standards and codes of ethics. Others, avoid product sales altogether, providing advice only.)

 

The problem with these titles is that, except for the province of Quebec, anyone may call themselves a financial advisor or a financial planner. There is no regulation on the use of these titles. They are meant to suggest a degree of competence but there is nothing to back up that competence beyond a licensing exam and affiliation with a sponsoring financial institution. The consequence is that the solutions to a customer’s financial needs are often little more than a financial product.

 

Enter the Financial Services Regulatory Authority (FSRA)

The FSRA is the Ontario body that regulates a variety of financial services that fall under provincial jurisdiction. These services include: insurance, credit unions, mortgage brokers and pension plan administrators. Writing about a bureaucracy is probably not the most exciting topic for a blog post. However, when it comes to financial advice, I tend to think it is important that society is served by people who have obtained a level of certified competence in their field of practice. In Ontario, the initiative toward this action is found in the Financial Professionals Title Protection Act.

 

With respect to provincial legislation, in addition to Ontario, Saskatchewan is following along close behind, but I am not aware of progress, if any, in other provinces of the country. You may want to contact the elected member of your provincial legislature to find out more or to raise the subject of proper credentials and titles for those who work in financial services.

 

Title Protection: Who Is It For?

Several years ago, an unlicensed dentist was discovered to be practising dentistry in Burnaby, BC. His case made bigger headlines because he disappeared for a period, only to be arrested some months later in Ontario. This individual had practised in his home office and used outdated and improperly sterilized equipment. I suppose that one could argue that he was providing a service to immigrants and low-income people who could not afford the fees associated with a properly regulated office. However, services that are dangerous and indeed life-threatening are hardly an effective solution. Regulation and enforcement are there for the benefit of the consumers of such services.

 

This applies no less in the realm of financial advice. While neither financial planners nor advisors are in the business of addressing a client’s oral health, advice regarding one’s financial health can have a significant impact on future wellbeing. For that reason, the government of Ontario is moving forward with a plan to limit the use of the titles “financial planner” and “financial advisor” to individuals who have obtained a credential from a credentialing body approved by the FSRA.

 

A Plethora of Titles

There is a bewildering array of titles, designations, and certifications available to those involved in financial services. Many of these certifications are quite rigorous. Others are less stringent. You can take a look here for a Glossary of Financial Certifications. I counted over 60 in the glossary, and although some of them are for roles that do not necessarily engage with retail consumers of financial services, you may encounter some of them and wonder what they might mean. I invite you to review the list to see whether you have ever encountered someone who held out one of these certifications to you as evidence of their qualifications.

 

Because there are so many titles, consumer advocates, as well as those interested in professionalizing financial services, have encouraged the development of this legislation. Until now (October 2020), the titles “financial planner” or “financial advisor” do not actually convey any expertise or knowledge. With this legislation, the FSRA will become involved in approving the credentialing bodies and the credentials those bodies offer. The goal is to limit the use of “financial planner” and “financial advisor” to those who are properly qualified.

 

Some Questions

Is the issue of titles used by people working in financial services of concern to you?

If you have used financial planners or financial advisors in the past, or engage one or more currently, what titles did/do they use?

What do you hope will be the impact of “title protection”?

Beyond the issue addressed in this blog post, what questions or concerns do you have about using and trusting those who provide financial services?

 

Read More

Below are a few sources about this initiative, if you would like to read more about the topic:

FSRA Working to Promote Consumer Confidence in Financial Planning and Advisory Services

FSRA seeking comments on title protection

[Saskatchewan] restricts advisory titles

On the cusp of momentous change in Ontario

FSRA sets proposed standards for planners, advisors

 

If you would like to read more about the Ontario Act itself, here are some links you can follow:

Financial Professionals Title Protection Rule and Guidance

Financial Professionals Title Protection – Administration of Applications

 

 

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Disclaimer: This blog post is intended for general information and discussion purposes only. It should not be relied upon for investment, insurance, tax, or legal decisions.