Unless you live in Quebec, you can call yourself a financial planner or financial advisor without any professional credentials to back it up.
That means the person advising you on your investments and retirement plan could be no more qualified for that job than you are.
But in Ontario, that’s set to change. Following direction from the provincial government, the Financial Services Regulatory Authority of Ontario (FSRA) has announced new guidance on how these terms will be handled.
“We think that there should be a reasonable expectation from investors that when they’re dealing with someone who holds themselves out with one of those titles, that there are the minimum standards associated with it,” says Huston Loke, executive vice-president of market conduct for FSRA.
New rules to come into effect over transition stage
The idea to make rules around who can and cannot call themselves a financial advisor or planner was first introduced by the Ontario government in its 2019 budget.
Now, anyone working under the title of financial advisor will have two years to upgrade their qualifications to the minimum standard set out by the province. Meanwhile, those working as financial planners will have four years.
Regulating these titles — including setting minimum education requirements and a professional code of conduct — will ensure Ontarians can be confident the advice they get from their financial professional is based on standardized knowledge and experience.
“Not everyone is a professional investor — most people do need the assistance of a professional,” says Loke.
“We look forward to having an environment where people know that they’re dealing with a qualified professional with minimum standards for proficiency and education who will put their interests first.”
Two certifying bodies already identified
In early April 2022, FSRA announced that FP Canada, the body that certifies professional financial planners across the country, and Advocis, one of Canada’s oldest and largest professional membership organizations for financial advisors, will be responsible for managing the designations in Ontario.
FSRA is still accepting and reviewing applications for additional certifying bodies.
Tashia Batstone, president & CEO of FP Canada, says while FSRA’s requirements were rigorous, she and her organization’s members see the value in having their titles regulated.
“The same way as you want to make sure that your doctor is actually a physician and that your accountant is actually a CPA or that your lawyer actually has written the bar exam … I think you want to have that same level of protection for the person that’s giving you your financial advice,” says Batstone.
Those who are already qualified as a certified financial planner or qualified associate financial planner through FP Canada, or a chartered life underwriter or professional financial advisor through Advocis, should be able to carry on like normal.
However, anyone who isn’t currently qualified will have either two or four years (depending on their title) to meet one of the designated bodies’ education and on the job training requirements:
Consumers expect minimum standards already
In a survey FSRA conducted in 2020, 86 per cent of respondents agreed there’s a need for minimum standards for the use of the titles in question.
And yet nearly three in five Ontarians already assumed their financial professional had credentials overseen by a government regulator.
With that in mind, consumer education will be an important next step, according to both Batstone and Loke.
“I think what this does is it manages expectations,” says Batstone. “It helps ensure that what the public expects, the public is actually getting.”
Batstone also hopes other provinces will follow suit. Saskatchewan has already passed legislation, while New Brunswick is considering its options after public consultations last fall.
“At the end of the day, we’re all serving the consumer,” says Batstone, adding that a greater level of compliance across the country is ultimately in the public’s interest.
For now though, she says consumers should still do their due diligence to ensure they’re working with a professional who is able to offer informed and unbiased financial guidance — because what’s at stake is too important to leave to chance.
“When you think about individuals that are looking for the services of a financial advisor or financial planner … ultimately, these are their hopes and dreams, they want to save for retirement, they want to help their family, they want to buy a house,” says Loke.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.