On Monday, IIROC released guidance notes reiterating a well-known industry complaint - that the myriad of business titles and designations out there are confusing and misleading to the average investor.
In its notes
, IIROC stresses the importance of increasing the public's understanding of an individual's registration status by using business titles that are coupled with "public disclosure and plain language" - particularly for those advisors handling senior's issues and retirement planning. In the case of IIROC members, the individual should indicate the IIROC approval category, corresponding proficiencies and that IIROC is a licensing body, say the notes.
In the latest issue of WP Magazine, Investors Group advisors and brothers, Nick and Joe Bakish, share why they feel the Certfied Financial Planner (CFP) designation is increasingly essential for the wealth management professional, amid, and perhaps in addition to, the myriad of titles and designations that can be acquired.
Many people choose to obtain designations after receiving the Certified Financial Planner (CFP) certification, wishing to acquire specialized knowledge in a particular area, just as some doctors specialize in various practices. We view the CFP – or Pl. Fin in Quebec – to be the starting point for a professional practice, much like an MD is for a career in medicine.
For example, both Nick and I (Joe) have the CLU and CFA designations. The former allows better discussion and understanding with lawyers and notaries concerning wealth transfer, while the latter allows better discussion with clients and portfolio managers.
In the current environment, trust is at an all-time low for the financial industry, therefore requiring clear standards for clients.
Pushing for the CFP
Today in Canada – outside of Quebec – anyone can call themselves a financial planner. There is no regulation that restricts the use of this title. Clients need to know that the person they have engaged to be their planner has the appropriate knowledge, skills and abilities to earn their trust.
Not only does a CFP professional meet internationally recognized standards of knowledge, skills and abilities, they are also obligated to follow a code of ethics that prescribes their professional duty to put their clients' interest first.
Since 2008, I (Joe) have volunteered with the Financial Planning Standards Council (FPSC) to help craft exam questions and mark completed exams. This process has shown the importance to me of having a baseline or standard in this field.
Client Protection – Next Steps
It is our view that to appropriately protect clients there must be:
- A single, unified set of standards for financial planners, so that clients are protected knowing their financial planner has the necessary professional competencies and will act ethically with due prudence and professionalism. The CFP certification is considered the "gold standard" in financial planning by our industry in Canada and so is a natural choice to be the single designation.
- The government should create title and holding-out restrictions by establishing a professional Financial Planners Act. Only those individuals, who have demonstrated their competence by meeting a single, unified qualification standard; consistent, ongoing professional ethics and continuous professional development requirements – as CFP professionals are doing today – will be permitted to call themselves financial planners. As a result, clients will no longer be at risk of poor or inappropriate planning by those who have not met minimum competency standards.
- Financial planner accountability should be monitored by one professional body, responsible for enforcing standards and representing public interests – as the FPSC is doing today. Canadians need to know that they can rely on financial planners, who meet universal standards of competence, practice and ethics determined and assessed by a panel of industry experts. Clients cannot, and should not, be expected to differentiate amongst financial planners working in one regulatory sector versus another. (continued.)
Certification and Training
To become a CFP professional, candidates must complete a rigorous education program, pass two national exams and have three years of qualifying work experience. To remain certified they have to complete professional education courses every year and agree to adhere to the Standards of Professional Responsibility for CFP Professionals.
CFP certification is recognized worldwide, with 17,500 CFP professionals in Canada, who belong to a global network of more than 150,000 CFP professionals across the planet. In Canada, CFP professionals are the largest identifiable body of financial planners in the country – the gold standard for the industry. Clients should not settle for less and advisors should strive to reach a standard level of proficiency.
Of course, this needs to be backed up with data proving that education matters.
The FPSC and the Financial Planning Foundation conducted a three-year longitudinal study to measure the impact of financial planning on Canadians' emotional and financial well-being, as well as the impact of financial planning services offered by CFP professionals compared to non-certified advisors. More than 15,000 Canadians, from all net-worth categories, were surveyed.
The study revealed:
- 78 per cent of Canadians who work with a CFP professional feel their financial affairs are on track versus 54 per cent
- More Canadians, who engage with a CFP professional, believe they are closer to achieving some of their life goals as a result of planning than those working with a non-certified professional (70 per cent versus 61 per cent)
- More Canadians, who are using a CFP professional, believe that financial planning has helped them achieve greater peace of mind than those working with a non-certified advisor (73 per cent versus 61 per cent)
- Canadians spend 36 per cent more time with their CFP professional than those working with a non-certified advisor.
- CFP professionals continue to have longer-term relationships with their clients – on average 6.2 years – than non-certified advisors – on average 4.6 years.
Nick Bakish: CFA, F.Pl, CLU, TEP
Scoring in the top 10 – No. 6 to be exact – on WP’s Top 50 Advisor’s in Canada list, released in January, Nick is one of the Investors Group’s most talented consultants, receiving numerous awards of distinction, since his inception there in 2002. With his clients’ interests top of mind, Nick sets himself apart with tireless devotion to continuing education – having obtained his CFA, along with the Trust and Estate Practitioner, Chartered Life Underwriter and Financial Planner designations. Nick is a member of the Financial and Estate Planning Council of Montreal and the Society of Trust and Estate Practitioners. He participated in the Million Dollar Roundtable and was a part of the prestigious Court of the Table. Nick graduated with first class honours in the joint economics and finance program at McGill University.
Joseph Bakish CFA, CFP, CLU, CHS
In 2005, Joe began working with Investors Group and has received the Investors Group Pillar award – recognizing an advisor's outstanding efforts at the beginning of their career – not once, but twice. Acting in his clients’ best interests, Joe continually educates himself having earned the Certified Financial Planner (CFP) designation, the Chartered Life Underwriter, the Certified Health Insurance Specialist and the Chartered Financial Analyst designation. Joe volunteers with the Financial Planning Standards Council marking and designing exam questions for the CFP exam. He also serves on the board of the Financial and Estate Planning Council of Montreal.
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