Renewed call for standardizing advisor certification

An interview with the Financial Planning Standards Council’s Stephen Rotstein reveals economic uncertainty may have pushed ‘title’ issue forward

As it stands if a person thinks they’re good with money, fancies doling out the advice yet doesn’t have all the fancy letters after their name, it’s not a problem. They can still call themselves a financial planner and no one will call them out on it.
This can be frustrating for planners who actually did study and obtained their certification. It could be that someone unqualified, using the term ‘planner,’ is snapping up clients that qualified planners could otherwise have had.
Stephen Rotstein, vice president, policy and regulatory affairs and general counsel of the Financial Planning Standards Council, says the situation is causing confusion for those seeking financial help and is putting them at risk.
“The status quo basically is that anyone can call themselves a financial planner, with the exception of Quebec, and Canadians have an expectation that the people that they’re able trust with their financial planning actually have met a minimum level of qualifications, have a level of competency and that they’re ethical and accountable to somebody if they fall below that standard. That is not the case for those just calling themselves a planner.”
Rotstein says this needs to change but after years of planners dealing with this system, why now?
“I think the financial crisis was a wake-up call for a lot of people because, prior to that, I think Canadians didn’t necessarily have a sense of what their financial futures were like because things had been going well. When things are going well it’s easy to get a sense that they’ll continue to go well.”
“When things began to change in 2008, I think Canadians really got a sense that they needed to take better control of their financial futures. In the end they went out there and they sought financial professionals and what they were finding is that they were holding themselves as planners but when they got deeper they realized that there wasn’t necessarily a universal standard for financial planners.”

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Currently there are 17,000 certified financial planners in Canada adhering to the council’s standards. For those operating without a certificate there is no one body holding them accountable meaning that when something goes wrong clients have no one to turn to. As a result the profession’s reputation becomes tarnished. It’s bad experiences clients have with unqualified planners that lead others into thinking planners aren’t worth having.
Rotstein says there needs to be a universal set of standards and thinks the recession pushed this need forward.
“With respect to the industry, what we’re proposing is to codify in law professional certification within the governance structure that already exists right now. This is with respect to the 22,000 people who have been certified and licensed in Canada. It’s taking the voluntary certification system and basically codifying it in law so that it would ensure the initial costs to the industry are minimized.”
The Ontario government has launched a consultation into whether the current provisions regarding the profession are sufficient. The expert committee are expected to release an interim report in the coming months.
The Financial Planning Standards Council, along with other organizations, has formed a financial planning coalition, which has made its own recommendations to the committee.
Their proposal addresses the lack of a set of standards, which leave clients confused when it comes to what a planner can offer. The Financial Planning Standards Council has asked the Ontario government to codify in law the professional certification structure, governance and oversight mechanisms that already exist in practice.
While this tackles the issue in Ontario, Rotstein states that there needs to be a nation-wide solution.
“The standards need to be harmonized among regulatory sectors. Ultimately, while this is an Ontario solution, the ultimate solution is that we need to have a form of national standards implemented at provincial level. The standard would need to be nationalized.”