businessman in a desk with financial advisor nameplate

Reps who want to call themselves “financial planners” will have to clear a higher bar than those that aim to identify as “financial advisors” under proposed new minimum standards from the Financial Services Regulatory Authority of Ontario (FSRA).

FSRA published proposals today that set out its approach to regulating the use of “planner” and “advisor” titles in order to ensure minimum levels of proficiency.

The proposals establish the minimum standards that credentialing bodies must test their designations against to win approval from FSRA under the planned new regime.

Organizations that grant and administer industry designations will be expected to prove that their credentials meet those standards in order to qualify under the new titling requirements.

“Credentialing bodies will be required to demonstrate in their application to FSRA how their licence or designation aligns with the education requirements in the proposed rule,” it said.

The proposed approach will not allow for grandfathering existing planners and advisors. FSRA also said that some existing designations may not meet its new standards.

For instance, it noted that the Life Licence Qualification Program (LLQP) likely won’t meet the minimum standards proposed today “because the curriculum does not fully align with the FP/FA baseline competency profile — in particular, content relating to client outcomes.”

Assuming that’s the case, reps that only hold LLQP credentials won’t be able to call themselves planners or advisors until they obtain a qualification that is approved by FSRA.

The proposed minimum standards for both planners and advisors requires credentials to ensure basic industry knowledge; understand ethical conduct, including how to deal with conflicts of interest; and sets expectations for dealing with retail clients, such as collecting KYC information, establishing a risk profile and financial objectives, and regularly reviewing those objectives.

For advisors, it expects them to be able to produce suitable client recommendations, whereas planners will be expected to be able to develop an integrated financial plan that “includes a holistic analysis of a client’s financial circumstances and suitable financial planning and investment recommendations.”

Under the proposed standards, advisors will also be expected to have competence in one of the following areas: estate planning, tax planning, retirement planning, investment planning and alternatives, finance management and insurance/risk management.

Planners will be expected to have knowledge of all of these areas and how they interconnect with each other.

Among other things, the consultation seeks feedback on whether FSRA’s proposed minimum standards are adequate, whether advisors and planners should be required to disclose the credential that qualifies them to use titles to clients, and whether exemptions from the requirements should be allowed.

The consultation also noted that FSRA will develop a fee model to recover its costs for establishing and administering the new credentialing regime, including compliance and enforcement of the permitted use of titles.

While the proposals don’t cover the details of the fee model, it is seeking comment on its proposed approach to fees, which would be collected by the credentialing bodies from advisors and planners on behalf of FSRA.

It noted that the initial setup and operating costs in the first year are expected to be between $3 million and $4 million.

It’s also seeking input on how to go about educating consumers about the new titling regime.

FSRA’s proposed approach is now out for a 90-day comment period ending Nov. 12, 2020.