boomer couple signing contract with financial planner

The lack of regulation of financial industry titles in most Canadian provinces leaves consumers confused about who is qualified to provide what advice. This often results in consumers missing out on the financial advice they critically need, including holistic financial planning advice. It’s time for policymakers to act.

The timing is right not only because the regulation of financial advice is a long-overdue consumer protection initiative, but because the industry overall has clearly signaled a shift toward professional advice as the basis for the future of financial services and there’s a strong appetite for change among consumers and the industry alike.

As consumers become savvier, they expect professionalism and true value from their financial advisors, beyond what technology can offer. Increased access to information has enabled consumers to educate themselves on the various options available to them. With extensive information at their fingertips, however, Canadians need the guidance and counsel of a true professional more than ever.

As financial matters become more complex, consumers need much more than a salesperson to provide them with one-size-fits-all financial products. Rather, consumers need holistic financial planning guidance from a professional who takes the time to understand their unique goals and circumstances and helps map out a plan for achieving those goals — whether that plan ultimately includes products or not.

The financial services industry recognizes the population’s shifting expectations and is adjusting its approach accordingly. The sales culture of the past is quickly giving way to relationship-based professional, rather than transactional, advice that is always in the best interest of the client.

Even as the industry makes strides toward this holistic professional approach, consumers have little way of distinguishing between the various types of “advisors” out there. Without clear title restrictions around the use of the title “Financial Planner,” among others, anyone can claim to offer professional financial planning advice regardless of their education, experience or other qualifications. As a result, Canadians in most provinces could be getting advice from someone they believe to be qualified to provide financial planning but who, in fact, has no relevant expertise or qualifications.

Strict titling rules could easily fix this. For instance, any individual wishing to use the title “Financial Planner” should be required to demonstrate his or her qualifications by obtaining and maintaining an approved credential from a recognized financial planning body that represents the public interest and that enforces the standards of the credential in a meaningful way. This would enable Canadians to readily identify someone who is equipped to provide them with the financial planning advice they need.

Since 2013, the Ontario government had demonstrated a commitment to dealing with this long-standing problem of consumer confusion around titles. A multitude of consultations have explored possible solutions, including an in-depth consultation and recommendations by the previous government-appointed Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives, in 2015 and 2016. In 2017, the Ontario government announced its intention to move forward with several of the Expert Committee’s recommendations, including creating enforceable standards to ensure all who hold themselves out as a “Financial Planner” are qualified, ethical, overseen and accountable for their professional conduct. Yet, despite the previous government’s commitment to protect financial industry consumers in recent years, we have yet to see any tangible policy changes.

With the 2018 election having ushered in a new government that has demonstrated its desire to act quickly and decisively on various policy matters, Ontario has an opportunity to continue the momentum on this critically important policy file.

It is encouraging to see that the current Ontario government is showing leadership in ushering this much-needed and long-overdue change. Ontario Finance Minister Vic Fedeli’s Fall Economic Statement included a commitment to review measures to ensure that families can be confident in their choice of financial planner or advisor, knowing they are dealing with someone who has received appropriate training and is subject to appropriate oversight. This commitment paves the way for Ontario to finally implement the regulatory change needed to provide consumers with clarity and confidence when choosing a financial planner. Where Ontario goes, other provinces are likely to follow.

This is a non-partisan issue, and Canadians cannot afford another lost opportunity. With consumers demanding transparency and the financial services industry shifting away from a transactional business toward professional advice, the time is now for policymakers to regulate the use of financial services titles — including the “Financial Planner” title — at long last.