Jim Virtue has lofty goals for his term as chairman of the board of directors of the Financial Advisors Association of Canada (a.k.a. Advocis).
Virtue, also president and CEO of Calgary-based PPI Solutions Inc. and a former insurance advisor, is focusing on one key objective during his year-long term as head of the Advocis board: setting the wheels in motion to establish financial advice as a formal profession and making Advocis the official association at the heart of that profession.
“I feel that the next step for independent advisors for members of Advocis is that we need to continue to professionalize the industry,” says Virtue, age 60, who began his term as chairman in June 2017. “I’m hoping that we will change how the association works and how the industry works.”
In Virtue’s vision for the industry, dubbed the “professions model,” all advisors in Canada would be required to earn a professional designation and belong to a professional association if they wish to use the title “financial advisor.” (Existing advisors without a designation could be grandfathered under the current system.)
The proposed model would create higher standards for anyone providing financial advice in Canada. The goal is to protect consumers better and give clients confidence that all advisors have met specific criteria.
“People who are giving financial advice should be part of a profession,” Virtue says. “A profession means that not only is there some rigorous education involved in becoming a member, but that there’s a code of conduct that you need to adhere to, that there are continuing education credits and that there’s a meaningful disciplinary process.”
Establishing that professionalism will allow the industry to demonstrate to regulators that it’s capable of self-regulation, Virtue says. The benefit of that is advisors would gain a stronger voice in the regulation of their industry.
“Right now, largely, what we have is regulation without representation,” Virtue says. “I believe that independent advisors need a voice and I think that Advocis is [that] voice.”
Getting a seat at the regulatory table is more crucial than ever, he says, given the high volume of regulatory changes underway. For example, regulators are considering a ban on embedded commissions in investment funds a change that would affect dramatically the way in which many advisors are compensated. In addition, the possible introduction of a fiduciary duty (a.k.a. a “best interest” standard) would have significant repercussions for advisors. (See stories on pages 17 and 18.)
Although having regulations in place that protect consumers is vital, Virtue says, those regulations must make sense for advisors.
Virtue’s past experience as an advisor helps him understand the concerns and challenges facing Advocis members. A chartered accountant with a commerce degree from Queen’s University, Virtue worked for various financial services firms early in his career. He became an independent life insurance advisor in 1995 and, in 2000, he bought a managing general agency (MGA). At that time, the MGA market was composed of many small firms, and Virtue saw an opportunity for consolidation.
“I thought this was a very good opportunity to get into this industry before it consolidates,” he says.
Virtue then expanded his MGA in the years that followed by carefully selecting acquisition targets that were a good fit for his firm. Then, in 2010, PPI Financial Group acquired Virtue’s MGA, which became PPI Solutions.
Today, the MGA market looks very different than it did when Virtue entered the business. Rapid consolidation has left a handful of huge firms that generate more than half the business in the industry.
Although MGAs are facing some key challenges, including growing compliance responsibilities and an aging advisor force, Virtue says, MGAs that are committed to supporting advisors will thrive. (See story on page 22.)
“The future for MGAs still is pretty bright,” he adds. “The ones that win the war will be the ones that add value for advisors and help advisors build their businesses. [The role of MGAs] isn’t a matter of just processing applications anymore.”
Virtue has been an active member of Advocis for many years, including several years as a member of the board of directors. Moving into the chairman’s role presents an opportunity to provide leadership in the pursuit of the professions model.
Although Virtue says he expected to get some pushback from advisors regarding the idea of a mandatory designation, the reaction has been positive.
“Advisors now are prepared to go through the effort to get a designation; they understand that it is important,” he says. “This is not turning into a hard sell. It’s an easy sell, because everybody seems to be onside.”
Advocis’ board of directors still is working on details of the model, such as which designations will be acceptable. Although Virtue doesn’t anticipate the professions model will be implemented by the time his term as chairman ends in June, he hopes to make significant progress in that effort.
Another goal is to grow Advocis’ membership of 13,000 advisors. “There are almost 75,000 independent financial advisors in Canada,” Virtue says, “so we should have 75,000 members.”
Part of the problem, he says, is many advisors aren’t aware of all the work Advocis does on their behalf. In addition, many assume that the advocacy work will take place regardless of whether they become a member. However, Virtue says, having a strong membership base is important, both to ensure the association has sufficient resources and to have greater clout with policy-makers.
“There’s strength in numbers,” he says. “We have a much stronger voice if we go to regulators and governments with 50,000 members than if we go with 13,000 members.”
Virtue will be spending much of his time this year meeting with advisors across the country to educate them on Advocis’ advocacy work, as well as the other benefits of membership, such as a broad community of peers and access to designations and education.
Outside the office, Virtue enjoys spending time with his wife and two grown children, as well as staying active through activities such as hiking, kayaking and cross-country skiing.