smiling young couple shaking hands with investment advisor

Advisors and planners can expect a flexible approach as title regulation is developed and implemented in Ontario.

The province’s new financial services regulator wants to minimize the regulatory burden as it also protects investors, said Glen Padassery, executive vice president of policy at the Financial Services Regulatory Authority of Ontario (FSRA). He was a panellist at Advocis’s regulatory symposium in Toronto on Tuesday.

FSRA is overseeing Ontario’s Financial Professionals Title Protection Act, which received royal assent in May 2019. The act will restrict the titles “financial planner” and “financial advisor” to those who obtain credentials from approved bodies.

FSRA is considering exemptions for those who already have certain licenses or qualifications, grandfathering for those with industry experience and qualifications, and a transition period for implementation, Padassery said. No further details were given.

Nor did Padassery comment on what title regulation means for insurance advisors. However, the other panellists offered perspectives.

Ali Ghiassi, vice president of industry affairs and government relations at Canada Life, described the Freedom 55 advisors with whom his firm works. They’re dually licensed to sell both mutual funds and life insurance, and roughly 50% are in Ontario, he said. That means they have completed the LLQP (Life Licence Qualification Program), required to be licensed as a life insurance agent.*

Referencing that licence’s coursework, Ghiassi said an advisor “with a life licence is in a position to call themselves a financial advisor […]. We would see it as a real regulatory burden if our advisors […] are asked to have a credential outside the current requirements that they have.”

The other panellist, Greg Pollock, president and CEO at Advocis, said he expects insurance advisors won’t be captured by the new legislation.

Ghiassi further said that insurance advisors should get to call themselves financial advisors because “that’s the case in Quebec, and in our view that’s an important consideration” for harmonization.

Quebec is the only province that regulates “financial planner” and restricts other titles. Insurance advisors in Quebec are “financial security advisors,” as noted by Ghiassi.

Harmonization was a key theme of the discussion. Pollock said Advocis has met with most of the provincial finance ministers in the last few months to discuss harmonization of title regulation, with ministerial support across the board. “People are already talking across the country about this,” he said.

In Ontario, FSRA is still in the process of determining what constitutes a credentialing body and which credentials will be accepted, Padassery said.

When asked which credentials he would like to see for planners, Pollock specifically cited the certified financial planner (CFP) and chartered life underwriter (CLU) designations. Advocis provides the certification program for the latter.

“We’re going to have to demonstrate to the regulator” why the CLU should be recognized, Pollock said.

As a potential credential for financial advisors, he cited Advocis’s professional financial advisor designation, a two-year program available in spring 2020.

What’s clear is that credentialing bodies will provide curriculum, issue credentials and monitor conduct, Padassery said. That means financial advisors and planners will be overseen by their credentialing bodies.

In contrast, FSRA’s enforcement will focus on those without credentials who use the regulated titles.

“The regulator will be responsible for everyone outside the perimeter,” Padassery said, “and the credentialing bodies will be responsible for the oversight, discipline and enforcement of anyone in the perimeter.”

Regulatory details will be developed with a forward-looking view to the industry’s direction, he said. That could mean, for example, additional education requirements for new entrants.

Regarding education, Pollock said he didn’t expect the new regulation to be a challenge for the typical advisor already in the industry. At the same time, “We need to up our game,” he said. “I don’t think we should be afraid of putting in some kind of entry-level requirement that involves post-secondary education. Is it a full university degree? I don’t know.”

Padassery said the next step in title regulation is a formal consultation process in the first half of 2020 to develop initial rules for exemptions, grandfathering, a transition period and the credentialing bodies. Following that, a legislative consultation of 90 days will occur, with feedback incorporated into the legislation.

Initial rules might start to come into effect in late 2020, he said.

An audience question posed to the panel was, “Can a financial planner call themselves a financial advisor if they prefer to do so?” While Padassery didn’t comment, Pollock said Advocis is recommending that planners have that option.

Any planner considering calling themselves a financial advisor would likely want to delay the decision until they can assess how the public perceives advisors versus planners. Padassery said FSRA is also considering how best to educate investors in a targeted campaign.

*Correction: A previous version of this story said that the LLQP was a designation. In fact, the LLQP is a training course required to become a licensed agent of life or accident and sickness insurance. Return to the corrected sentence.