Financial planning has become a divisive term with different meanings for different people. It has been argued that the term has become devalued based on so many practitioners being able to claim the title even though they are linked to products or overly transactional.
With that in mind we spoke to John DeGoey, portfolio manager at Burgeonvest-Bick Securities Ltd, about his concerns about the sector. Indeed the ability of so many people to give themselves the financial planner label is top of his list of problems within the industry.
“The industry is not regulated – except in Quebec - and therefore anyone can presently call themselves a financial planner without consequence - whether accredited or not,” he said.
“Furthermore, my sense is that most people are using planning assumptions that are wildly optimistic – especially on the income side. The real return on income is almost certainly close to zero for the next generation.”
Some have suggested that higher levels of qualifications are required to lift financial planning’s profile. The Certified Financial Planner (CFP) qualification implores people to pass an ethics test to maintain its status, but DeGoey is disappointed that some industry associations are promoting other qualifications.
“Various organizations are doing what they can,” he said. “Unfortunately, some have an agenda that extends beyond education (for instance, some promote designations other than CFP as being adequate). Ideally, provinces should pass legislation that would establish financial planning as a true profession – like law, medicine or accounting. There’s a reasonable chance we could hear more about this in the Ontario budget due next Thursday.”
Some analysts believe the industry needs a firmer voice: a body that will speak up for financial planners and ensure it is regulated properly. Nevertheless, DeGoey is not critical of the Financial Planners Standards Council (FPSC), which he believes is doing a good job representing legitimate planners.
“The FPSC grants the CFP mark which, in my opinion, is the only designation that ought to be recognized as representing a true financial planner – in Canada or anywhere else, for that matter,” he said. “The FPSC does a good job on enforcement, advocacy, education and continuing education for CFP registrants.”
Do you agree with DeGoey’s perspective on the industry? Should more be done to ensure a clearer qualification system and to regulate planners? Leave a comment below with your thoughts.