It’s been a long time coming, but what are the benefits for advisors?
Thousands of financial advisors have built thriving businesses across Canada, but the ability to leverage the benefits of incorporation has created barriers that some other professions do not face. But change could be incoming.
For CIRO-registered advisors, incorporation hasn’t been an option, limiting financial planning autonomy, tax planning opportunities, and succession options.
But recently, CIRO has publicly acknowledged that it has started exploring a rule change that would allow incorporation, and while it won’t happen overnight, this willingness of the regulator to consider a change could be a game-changer for more than 30,000 licensed professionals.
Why incorporation matters
The ability to incorporate isn’t just a box to check or a legal technicality, it’s a structural shift and one that could reshape how advisors manage, grow, and eventually transition their businesses.
It can unlock:
- Tax Efficiency
Incorporation could allow advisors to access the business tax rate, instead of being taxed at personal marginal rates that can exceed 50%.
This opens up strategies such as income splitting, dividend deferral, and retained earnings, all crucial for long-term wealth creation.
- Succession Planning
Currently, many advisors face a problem: they’ve built something valuable, but there’s no clean way to pass it on.
A corporation creates an asset that can be sold or transferred. This helps advisors build enterprise value in their book of business and exit on their own terms.
- Liability and Credibility
A corporation can provide a layer of legal separation between the advisor’s personal and business liabilities.
It also enhances professional credibility and makes partnerships, mergers, and staff compensation planning more flexible.
Who benefits most?
If CIRO does decide to move forward with allowing incorporation, the biggest winners from would be mid-to-senior level advisors with established books of business.
However, CIRO will likely introduce new compliance frameworks to ensure incorporated advisors remain accountable and there could be restrictions on ownership structure, tax planning strategies, etc.
Advisors should be prepared for trade-offs — and paperwork.
Forward planning
CIRO hasn’t set a timeline, but momentum is building. Here’s how to stay ahead of the curve:
- Talking to a tax lawyer or accountant to model what incorporation could look like in your specific case.
- Building your practice with incorporation in mind, documenting processes, improving compliance hygiene, and investing in scalable tools.
- Joining industry advocacy groups that are pushing CIRO for faster reform.
Change is overdue
A move to incorporation of advisory practices is about recognizing that advisors aren’t employees. They’re business professionals. And it’s time the rules caught up.
CIRO is evolving to reflect the modern landscape of the industry and allowing this structural change would be a sign that the profession is maturing and that the regulator acknowledges that.
The opportunity is coming. Smart advisors will be ready when it does.
