Province's comprehensive approach to FA title regulation suffers from fundamental flaw, says Jason Pereira
While Saskatchewan’s proposed regime for title protection is based on good intentions, the province’s proposed approach to regulating the financial advisor title is fundamentally flawed, according to the founding president of the Financial Planning Association of Canada (FPAC).
“I’m not a fan of Ontario’s approach, which is to require proficiency across multiple areas but expect the absolute bare minimum level of proficiency from title holders. The desire to protect consumers through proper title protection is absolutely important,” says Jason Pereira, who’s also a partner and financial planner at Woodgate Financial. “But what they’re proposing in Saskatchewan is not the solution.”
Speaking for FPAC, Pereira says that the province should ideally abandon its proposed title protection standard for financial advisors. He argued that while the title of financial planner is a globally recognized designation with an ISO code that’s overseen by an international standards body as well as regional standards bodies, the same isn’t true for the FA title.
Read more: Saskatchewan’s FA title proposal the right path forward, says veteran advisor
“It is an amorphous term used to refer to all forms of financial advice, that could be insurance, estate planning, tax planning, investment planning, or anything else,” Pereira says. “Trying to protect that title makes little sense unless you’re going to reflect how it’s actually distributed, which is through different individual channels.”
If the province decides to move forward with protecting the FA title, he argues, it should make sure consumers have a clear and explicit understanding that the individual advisor they’re dealing with specializes in a specific domain.
“We do agree that an FA should have an understanding of the entire planning landscape and how decisions in their area can affect a client’s entire planning picture,” he says. “But they’re saying a financial advisor should have identical competencies as a financial planner, except that FPs have the capability to generate a financial plan. How does that make sense in any way, shape, or form?”
While some organizations have weighed in to express support for the province’s enhanced expectations for financial advisors, Pereira argues they may also have a vested interest to do so if they offer designations that could become required credentials for financial advisors in Saskatchewan.
Read more: Title protection regime comes under fire
“The Financial Planning Association of Canada doesn’t issue a designation, and its charter forbids it from ever doing so. We do not have a horse in this race,” he says. “The regulators should be considering that conflict of interest that some of these institutions have when they are pushing for a different standard.
“If the financial advisor title is going to exist at all as a protected title, it should deliver at a proficiency level akin to what should be a financial planning proficiency level, which is the CFP or better,” Pereira says. “At the same time, it should be reflective of the actual distribution and enforcement mechanisms that already exist in the industry.”