advisor client meeting

There’s been a lot of water under the bridge in the 25-plus years I’ve been involved in the industry. And while FP Canada’s founders could not have imagined that 25 years on, we’d still be debating who can or cannot hold out as a financial planner, much has also been accomplished in furthering our goal of professionalizing financial planning.

As I get ready to continue my life’s journey as I step down as president and CEO of FP Canada, I can’t help but reflect on the state of the industry and the financial planning profession back in 1995, compared with today. What stands out most to me about what has (or perhaps hasn’t) changed is my memory of a debate regarding the relative merits of whether financial planners should be held to a “client interest first” standard that took place at FP Canada’s inaugural Financial Planning Week symposium back in 2009.

I remember well the words of a senior executive of a large financial services provider at the time, who sat on the stage and told the audience: “Let’s face it — we’re a sales organization first.” And, while times and attitudes have changed, we still have a ways to go before financial planning will truly be professionalized for the benefit of Canadian consumers.

Now, with the onset of new disruption brought on this past year by the global Covid-19 pandemic, the industry and the profession are at a crossroads. So rather than reflect on the past, I’d like to leave you with four thoughts on the future, in light of this disruption:

1. Technology and artificial intelligence will live symbiotically with human advisors

Human financial advice in its traditional form will not survive the onslaught of fintech tools and artificial intelligence (AI). But as robo-advice platforms and AI continue to develop, tech without humans is also unlikely to survive. In the end, humans without tech and tech without humans both lead to inferior advice; it’s the symbiosis of the two that will change the game, for the betterment of all.

2. A shift to financial planning as a social science

It’s taken thirty years, but there is finally an awakening happening: without a direct link of financial goals to life goals, money is only as valuable as the paper it’s printed on. Most people don’t just want to make more money; they want to figure out their lives, and they want the financial wherewithal to live their lives confidently. Financial planning is life planning, and as a result of this paradigm shift in thinking, in the decades ahead we’ll see financial planning education shift from being solely focused on math, finance and business to include (and, in many cases, be driven by) an understanding of – and empathy for – people. As a result, look for financial planning programs to emerge not just out of business and finance schools, but out of social sciences programs in institutions of higher learning.

3. It all adds up to a future of financial advice that lies in 3H financial planning

The future of all professions lies in the services that technology can’t supplant, and financial planning is no different.

Without a paradigm shift in thinking of what the financial advice industry needs to be, there is no future for human advice. If, however, financial advice becomes synonymous with a professional service based on advice that sees clients through an holistic lens, that delivers on the human side of the equation by employing empathy and utilizing principles of behavioural economics to produce the right client outcomes, and that provides honest, ethical, professional service – always with the client’s interest ahead of all others – financial planning will finally be recognized by society as a true profession.

4. In a decade, the “best interest” debate of the 2010s will sound absurd

Which leads to my final prediction, and one that can’t come soon enough. The days of consumers accepting financial advice based on anything less than an expectation that those providing that advice are always acting with an appropriate duty of care and loyalty to their clients are finally, and rapidly, coming to an end.

Consumers have become savvier. The next generation of clients is generally less trusting of “professionals” and less likely to blindly trust their “advisor.” Advisors (and the firms that employ them) who cannot fully embrace this reality will not survive.

The industry is shifting from one of sales to one of professional service. But talk is cheap. As governments and regulators consider their own rules and regulations for financial planners and advisors, it’s time they bring up their ethical standards to match the industry shift — and, most importantly, consumer expectations — by embedding true professional advice in law.

I’m confident each of these predictions will come true as I watch these ideas and ideals already being embraced. So I say with confidence, financial planning will finally become a profession, and the future for professional advice has never looked brighter.

After 15 years as President & Chief Executive Officer of FP Canada, Cary List will be retiring from his position on June 30, 2021.