Female advisor meeting with male client at hotel lobby

It has been a long time coming, but the Ontario government has moved on regulating financial planner and financial advisor titles. But the Financial Professionals Title Protection Act may mean more than just title regulation — it could also create a professional oversight regime for planners and advisors.

Whether I am right or wrong will depend on the details of how this act is implemented. What we know so far:

  • the act will be overseen by the newly created Financial Services Regulatory Authority of Ontario (FSRA);
  • it will protect both the “financial planner” and “financial advisor” titles by restricting their use to individuals who have obtained a credential from an approved credentialing body that is in good standing;
  • credentialing bodies must be approved by the FSRA;
  • the FSRA will ultimately approve financial planning and financial advising credentials submitted by approved credentialing bodies;
  • there will be a public list of both approved credentialing bodies and approved credentials;
  • the FSRA will have ongoing enforcement powers to review both approved credentials and credentialing bodies, and revoke approval if the rules are not followed; and
  • there will be rules governing those who misrepresent themselves either as an approved credentialing body or as having an approved credential.

What are the positives?

  • This looks like the United Kingdom system of overseeing financial services professionals. Under the U.K.’s system, credentialing bodies produce an annual statement for individuals showing that they have completed their professional development and their conduct is in good order as required by the regulator. I have long argued that the title or professional designation is only as good as the credentialing body that issues and oversees it. Not all credentialing bodies operate at a high standard. Approving the credentialing body is certainly a great move to ensure more consistent credentialing standards.
  • Allowing the public to check whether their financial planner or financial advisor holds an approved credential from an approved credentialing body should ensure better consumer protection, and more effective policing of the unqualified.
  • Creating standards that allow consumer choice by permitting multiple approved credentials should keep the cost of advice lower for Ontario financial consumers over the long term.
  • This act may encourage other provincial governments to follow suit, just like seatbelt legislation did in the 1970s.

What are the unknowns and challenges?

  • Will financial planning and financial advice be delineated effectively for the financial consumer? I always felt the distinction is rather simple. Financial planning is the design of the advice, whereas financial advising is the implementation of the advice.
  • What will the duties of the credentialing bodies actually be beyond issuing their approved credentials? Will they be required to do full oversight in the areas of professional development, ethics and conduct, and standards of practice? I assume this will be the case, but we will need to wait for the details.
  • How will this system be coordinated with existing regulators to ensure consistency for financial consumers? Information sharing will be a key success factor.
  • How will credentials and credentialing bodies be approved? It will be important to avoid a race to the bottom to a minimum standard in order to gain consensus from various stakeholders.

These are just a few observations. I am sure that these and many other issues will be debated before this act is fully implemented. There is no doubt that there are many positives in the act, but the details will determine its reach.

Financial planners and financial advisors in Ontario need to prepare for these upcoming changes. The act will, at minimum, protect the two most common professional titles in the industry, but it could also create a professional oversight system that could potentially go national. We will need to await the details.