FPSC CONCERNED CAIFA/CAFP PROPOSED MERGER INITIATIVES WILL CONFUSE PUBLIC
The clear identification of planners who meet and adhere to uniform standards of professionalism is key to protecting the Canadian consumer of financial planning advice. Each of the seven industry organizations that assist FPSC through board representation have understood and worked toward this mission for more than six years. Among them are two organizations that, for economic and other practical reasons, are now discussing initiatives that may conflict with FPSC's efforts. They are the Canadian Association of Insurance and Financial Advisors (CAIFA) and the Canadian Association of Financial Planners (CAFP).
In a discussion paper that outlines the purpose of a new organization that would result from a merger of CAIFA and CAFP, initiatives that will confuse the public and complicate regulatory efforts to protect the consumer of financial planning advice are unveiled. FPSC urges all industry stakeholders to read carefully the discussion paper that has been distributed to members of these organizations and made public on their respective websites (www.caifa.com and www.cafp.org). While not opposed to the merger of these longstanding supporters of FPSC, FPSC is concerned about some of the duplicative and premature initiatives of the proposed new entity. Of particular concern is the stated purpose of these new initiatives, which is to try to differentiate "planners" from "advisors," and planners and advisors who are members of the new organization from those who are not. FPSC believes the introduction of four new categories to the existing array of titles, acronyms and designations will add to public confusion and complicate regulatory and industry efforts to protect the public from seeking advice from individuals who are not qualified to offer it.
The proposed development of a new code of ethics, and the parallel development of practice standards are redundant in the wake of industry and market recognition of CFP certification as the "gold standard." Also, FPSC believes that initiatives such as the proposed peer review and triennial examinations on the contents of a new code of ethics are premature in the first instance, and inconsequential in the second.
A recent FPSC-commissioned study into industry practice and strategic use of financial planning services suggests peer review of the practice of comprehensive financial planning would, of necessity, be limited to a very small percentage of individuals who offer or hold out as experts in financial planning. In-depth interviews with senior management of 9 retail banks, 10 brokerages, 28 financial planning firms, 5 mutual fund companies, 13 insurance companies, 5 law firms, 4 accounting firms and 2 industry educators determined that "financial planning" as a process inclusive of all six-steps is not yet widely practiced in the industry today. However, Canadians continue to access financial planning advice and assistance through their bankers, brokers, lawyers and insurance representatives. More than 14,000 of these financial intermediaries currently meet the CFP licence requirements in proficiency and ethical behaviour.
As for ongoing examinations on the code of ethics, it is the application or living of a code of ethical behaviour on a daily basis with every client, every time that is fundamental to being professional. Living the code is what counts.
FPSC has expressed its concerns with both member organizations and looks forward to further exploration as to how a new merged membership organization can continue to aid FPSC's efforts in establishing uniform professional standards that protect the public and further the evolution of the profession in Canada and worldwide.
MORE UNIVERSITIES DEVELOP PROGRAMS LEADING TO CFP
Two new programs have been added to the growing list of those approved by FPSC as meeting the CFP educational requirement for CFP certification. They are a new 4-year, full-time BBA Honours Degree with a Specialization in Financial Planning that will be offered this fall by Wilfrid Laurier University, Waterloo, ON, and the Certified Employee Benefit Specialist (CEBS) Financial Planning program, sponsored by Dalhousie University, Halifax, NS, offered by distance learning. There are currently 88 programs offered at 66 institutions across Canada that lead to CFP certification.
FPSC SURVEYS PLANNERS ABOUT WHAT THEIR CLIENTS DON'T KNOW
Confusion about financial planning, what it is and who is qualified to offer it, continues to abound in the marketplace. FPSC's recent survey of almost 700 financial planners working in every segment of the industry across Canada indicates more must be done to educate Canadian consumers of financial planning advice. CFP professionals say common misconceptions about the process and elements of financial planning continue to be held by even those who know enough to seek professional advice.
The most frequent mistakes made by clients are neglecting to have their financial plans re-evaluated periodically,
confusing financial planning with investing and neglecting to set measurable goals.
FPSC STEPS-UP CONSUMER EDUCATION CAMPAIGN WITH A NEW WEBSITE
Educating the consumer about financial planning remains an integral part of FPSC's efforts to clarify for the public:
the financial planning process and how it can help Canadians realize their life goals;
how to choose a planner;
what to expect of qualified financial planners; and
who is qualified to offer professional financial planning advice.
The backbone of our campaign is the FPSC website, which is promoted through all our marketing and public relations initiatives and as a result of our "Take the Next Step" campaign, more browsers visit the site than ever before. There are now more than 30,000 user-sessions averaging 8 minutes recorded per month.
Recognizing the value of this tool as an educational resource, FPSC launched a new design with many additional features during the current National Investor Education Month. Browsers can now check if a planner is a CFP professional in good standing with a new online search function. They can e-mail planning-related questions to a rotating panel of CFP experts and receive a personalized response. A tremendously expanded list of resources including books and articles written by CFP professionals, a comprehensive industry directory of organizations, links to other web resources, timely financial planning tips, definitions of industry acronyms and a short financial planning quiz are all designed to enhance the site as an educational resource for the public.
NEW INTERNATIONAL CFP ORGANIZATION EMERGING
The evolution of financial planning as a profession is an international phenomenon. There are now 17 not-for-profit organizations around the world that develop and regulate standards for individuals who earn the CFP designation. No other designation or certification process in financial planning has garnered such worldwide recognition. CFP represents the highest international standard in financial planning. In an effort to continue the momentum, the International CFP Council, of which FPSC is the second largest member, has begun the process of investing itself as a truly independent international entity that will deliberately and strategically spur the evolution of the profession around the world. The emergence of a new international entity with the sole mission of establishing professional standards in financial planning will ensure the evolution keeps apace of maturing global economies. In Tokyo this month, the International CFP Council will agree to a Memorandum of Understanding that details the transition of the international council from a committee of the CFP Board of Standards, which currently owns the CFP trademarks, to an independent entity that will ultimately own, protect and promote the marks, the certification process and standards they represent globally.
May 2001
FPSC DEVELOPS PRACTICE STANDARDS
FPSC has taken the next logical step in developing
the financial planning profession in Canada by defining Standards
of Practice for CFP professionals. The Standards of Practice,
currently being developed for communication to all Canadian CFP
professionals and the public, will ensure that the professional
practice of financial planning is based on common tenets;
will advance professionalism in financial planning; will enhance
the value of the personal financial planning process to Canadians;
and will provide benchmarks for the implementation and imparting
of accountability in the financial planning engagement.
INTERNATIONAL ORGANIZATION OF STANDARDIZATION
TARGETS FINANCIAL PLANNING
FPSC President Don Johnston represented Canada
at the first meeting of the International Organization of
Standardization's (ISO) technical advisory committee on financial
planning this February in Atlanta. Delegates from 13 participating
and 17 observing countries attended the meeting in which the
following "scope statement" was approved:
Standardization in the field of personal financial
planning, including standardization of the certification of
practitioners based upon elements of education, examination,
experience and ethical conduct, and standardization of the
personal financial planning process which typically includes,
but is not limited to, the six elements of establishing and
defining the client/planner relationship, gathering client
data including goals, analyzing and evaluating the client's
financial status, developing and presenting financial planning
recommendations and/or alternatives, implementing the financial
planning recommendations and monitoring the financial planning
recommendations.
The establishment of four working groups to begin
the process of developing international standards in financial
planning specific to: definitions, process and practices;
competencies; ethical requirements; and experience requirements
was approved. Canada will convene the working group on Ethical
Requirements.
ISO brings together the interests of producers
and users in the preparation of international standards.
ROSTER OF FPSC REGISTERED EDUCATION PROGRAMS
GROWS
More universities, colleges and financial industry
educators respond to the increasing demand for a national
and internationally recognized designation in financial planning
by developing financial planning programs that lead to the
CFP. In the past eight months, FPSC has approved 11 new programs
including ones developed by the Jacks Institute in Winnipeg,
George Brown College in Toronto, Ryerson Polytechnic University
in Toronto and the University of Quebec Network. The University
of Quebec Network includes seven universities in locations
across the province, all of which now offer a new jointly
developed program. Depending on the education provider, courses
are part of full-time day or continuing education programs
and lead to certificates, diplomas and/or degrees. The current
trend in new program development is to integrate the CFP Exam
Syllabus into existing finance, business and/or commerce curricula.
FINANCIAL PLANNERS INDICATE HIGH JOB-SATISFACTION
As part of its ongoing efforts to add more value
to the services it provides to the financial planning community,
FPSC conducted a survey to examine job satisfaction and the
quality of work-life of the largest identifiable body of financial
planners in Canada - CFP professionals. Approximately 11,000 questionnaires
were distributed during the first three weeks of November
2000 to planners across the country. One thousand and two
hundred responses were received. According to Hart & Associates
Management Consultants Ltd., the market research firm commissioned
to analyse the results, an over 10 per cent response rate
is statistically sound and the results of this survey represents
"a very accurate reflection of the opinions of professional
financial planners in Canada today." In addition to the
major findings that collectively suggest professional planners
are satisfied they have chosen an exceptionally rewarding
career, the results also include the following suggestions
as to how the industry could be served better:
Implement more stringent
professional standards including stricter professional ethics
and making sure that they are effectively enforced;
Enforce one standard, mandatory
designation for all people using the term financial planner;
Minimize unnecessary "red
tape" and compliance issues that are felt get in the
way of providing service to clients; and
Make it harder to enter
the industry - there is a general sense that it is too crowded
and that entry standards are too low.
For the complete Quality of Work-life Survey,
visit www.cfp-ca.org under the Surveys section.
CFP EXPANDS GLOBAL RECOGNITION
The International CFP Council approved Hong Kong's
Institute of Financial Planners as the 14th member at its
Fall meeting in Frankfurt, Germany. Also at this meeting,
the Council welcomed its first associate members: Instituto
Brasileiro de Certificação de Planejadores Financeiros
(IBCPF) of Brazil; the Financial Planning Association (FPA)
of Bermuda; and the Financial Planners Standards Board (FPSB)
of India. Associate membership is offered to organizations
preparing to become full members of the International CFP
Council.
HEALTHY CFP EXAMINATION SITTINGS RECORDED
FOR 2000
The two CFP Examination sittings in 2000
registered 3,178 candidates. The pass rates were 61.5% and
60.3% for the June and November exams respectively. With the
addition of the latest successful candidates, there are currently
12, 804 CFP practitioners licensed by FPSC. Now recognized
by financial planning organizations in 14 countries, CFP professionals
number approximately 60,000 worldwide. The Certified Financial
Planner Examination is written twice yearly, in June and November,
in both official languages in locations across Canada, and
internationally as required.
May 2000
PROPOSED REGULATION OF FINANCIAL PLANNERS
The Ontario Securities Commission (OSC), on behalf of the Canadian Securities
Administrators (CSA), published for comment, a proposed Multilateral Instrument
33-107 (Rule) for the governing of financial planning activities of product
registrants and life agents. The comment period ended on March 6, 2000. All
42 formal comments submitted by associations, businesses and other interested
organizations express significant criticism or request specific changes to the
Rule.
FPSC's submission fleshes out major concerns with the pending Rule. As it is
written, the Rule contains conflicting statements and ambiguous inferences that
impede understanding. FPSC receives daily queries from confused industry professionals.
FPSC is concerned that if industry insiders are unsure of the intent of the
proposed rule, specifically the level at which a proposed mandatory proficiency
examination will test, a lay-public already harbouring misconceptions will be
more confused than ever. As an organization that has been, for four years, setting
and monitoring professional standards for financial planners who wish to earn
the internationally recognized CFP designation, FPSC is also confused about
the motivation behind a seemingly duplicative effort. The complete FPSC submission
to CSA can be viewed at www.cfp-ca.org.
PROFESSIONAL PROFICIENCY EXAMINATION AND CERTIFICATION AUDIT
As part of its ongoing commitment to a standard-setting and certification process
that will produce competent and ethical CFP professionals, FPSC contracted Assessment
Strategies Inc. (ASI) to conduct an external audit of its certification program.
ASI is a Canadian assessment development and administration company that specializes
in competency-based licensure and certification examinations/programs. FPSC
asked ASI to verify and express an opinion on the extent to which the CFP certification
program (including policies, procedures and outcomes) meets with accepted measurement-industry
testing standards. ASI concluded FPSC has a solid certification program and
states in its audit report "the FPSC examination program is based on sound
measurement principles as of 19 January 2000. No violation of generally accepted
measurement standards was observed such that examination results could be called
into doubt."
Motivated by the results of the consumer survey last fall that suggested Canadians
need to know more about financial planning, FPSC introduced one new consumer
brochure and updated two others. The newest offering, "Your Guide to Financial
Planning", outlines what financial planning is, why and when one should
seek professional planning advice, and from whom. Revamped were "Measure
of Trust", explaining why Canadians should put their trust in a CFP professional,
and "10 Questions to Ask," which states questions one should ask a
financial planner before agreeing to an engagement.
Additionally, throughout the months of September, October, January and February,
FPSC aired two advertisements nationally to state the importance of financial
planning, increase awareness of the CFP designation and draw consumers to the
newly redesigned website. These advertisements, entitled "Take The Next
Step" can be viewed at www.cfp-ca.org. By directing the general public
to the website, traffic tripled from September 1999 to February 2000.
FPSC asked Hart and Associates, an independent management consulting and market
research firm, to conduct the survey of 750 Canadians to find out what financial
planning means to them. The findings indicate those individuals who have plans
professionally prepared for them are generally satisfied with the quality of
service they get from their financial planner. They also suggest that most people
associate financial planning with retirement planning, ensuring their financial
security, saving, and investing. Most (77%) feel it is important that the individual
to whom they turn for financial planning advice holds a professional financial
planning designation. The complete results of the survey can be viewed at www.cfp-ca.org.
CFP PROFESSIONAL PROFILE UNDERWAY
A questionnaire designed to gather data that will help FPSC better define the
profile of financial planning professionals and the market they serve is now
included with every CFP licence application form. The data currently being collected
will facilitate the development of future educational campaigns and provide
media, regulators, the industry, and the public with much sought after information
on the financial planning profession.
JANUARY ISSUE OF ADVISOR'S EDGE FEATURED GLOBAL FINANCIAL PLANNING ARTICLE
Representatives from seven countries, including FPSC President Don Johnston
and CFP-Board Chair, Harold Evensky, participated in a roundtable discussion
on the global evolution of financial planning as a profession and more specifically,
the CFP designation. The article focussed on the global growth of the CFP designation
as the highest standard in financial planning and why more countries are seeking
to have it recognized. This April, the International CFP Council accepted the
Korean Financial Planning Association's bid to grant the CFP to qualified practitioners,
bringing the total number of countries in which CFP certification is now available
to 12.
FIVE ACADEMIC PAPERS ON FINANCIAL PLANNING PRESENTED
The second International CFP Council's Academic Advisory Panel convened April
11, 2000 in Cape Town, South Africa. Academics from Australia, South Africa
and United States presented five papers on non-investment retirement issues.
Professor Tom Potts, PhD, CFP earned the award for "best paper" for
his research in "Effective Retirement for Family Business Owners-Managers:
Perspectives of Financial Planners". The next meeting will be held in New
Zealand in April 2001, and FPSC will issue a Call for Papers to the Canadian
academic community in June 2000. The theme for 2001 is long-term care/health
issues. The International CFP Council established the Academic Advisory Panel
in 1999 to serve as a forum in which the international academic community could
share, encourage and recognize research on financial planning issues.
NUMBER OF CFP PROFESSIONALS AND REGISTERED EDUCATION PROGRAMS CONTINUE DRAMATIC
GROWTH
One year ago, there were 8911 CFP professionals in Canada. Currently, there are
11,113 - representing a growth of 25%.
In Canada, there are 85 programs offered at 66 institutions that are registered
with FPSC or have entered into partnerships with The Canadian Association of
Insurance and Financial Advisors or The Canadian Institute of Financial Planning.
September 1999
Syllabus Review undertaken to ensure CFP Professional Proficiency Examination
(PPE) stays relevant
During the fiscal year ending March 31, 1999, FPSC completed a review of the
current syllabus. A Syllabus Task Force comprised of CFP certified practitioners
and academics reviewed related materials and developed a revised draft body
of knowledge as the basis for the examination. The draft was examined by over
300 practising CFP professionals to assess the importance of specific areas of knowledge
and their frequency of application relative to professional practice.
The result of the review is a revised syllabus that will be implemented in
the 2001 examination sessions. The process and results of the Syllabus Task
Force Review have been shared with the CSA taskforce looking into the development
of a mandatory examination of product registrants who offer financial planning
advice to their clients.
3200 wrote exam in 1998/99 marking steady growth in recognition of CFP as the
hallmark of the professional financial planner
Significantly contributing to the tremendous growth in exam registrants is
the steady increase in the number of candidates qualifying to write the exam
by completing one of 79 FPSC approved educational programs. Ninety-eight course
graduates wrote the first exam offered in June 1997, 364 in November 1997, 556
in June 1998, 1,057 in November 1998, and 1,149 in June 1999. There are currently
over 14,000 students enrolled in courses leading to the CFP designation. FPSC
expects that registration for the November 1999 exam will include the largest
number of graduates of FPSC approved programs to date.
The growth in numbers of exam registrants also includes those qualifying to
write the exam by holding certain degrees and/or professional designations and
memberships: (CA, CGA, CMA, CLU, CFA, Ph.D. in business, economics or finance,
membership in provincial law societies). Those qualifying to write the exam
in this way must also have completed three years work experience in a financial
planning related field prior to writing the examination.
FPSC expects to add 1,600 new CFP professionals this year through the exam process
to its current CFP professional base of about 9,500. These individuals work in every
segment of the financial services industry across the country and their numbers
are beginning to ensure that professional, competent and ethical financial planning
advice is available to all Canadians.
New Laurentian University Programs approved by FPSC
At its June 24th meeting, the Board of Directors of FPSC approved the new French
financial planning program of Sudbury's Laurentian University, bringing the
total number of programs leading to the CFP to 79 offered at 62 institutions
across Canada.
CFP recognition enjoys dramatic global growth
Three new countries - South Africa, Switzerland and Singapore - were added
to the International CFP Council, of which FPSC is the second largest member.
There are now 11 countries endorsing the CFP as financial planning's highest
standard, and 17 other countries are currently requesting membership into the
prestigious community of professional standard-setters. There are now over 50,000
CFP professionals world wide.
International Financial Planning Membership Organizations endorse CFP
In 1997, the International Association of Financial Planning (IAFP) publicly
recommended that practitioners who hold themselves out as financial planners
attain the CFP designation. Recently, the IAFP and the Institute of Certified
Financial Planners (U.S. based membership bodies) voted to merge and form the
Financial Planning Association. This new association will publicly promote the
position that when consumers need sound financial planning advice, they should
go to a CFP professional. It will also encourage and facilitate the attainment of
the CFP designation by financial planners. In Canada, the membership organizations
CAIFA, CAFP, CICA, SMA and CGAAC publicly endorse the CFP designation.
FPSC moves toward informing public of importance of receiving qualified professional
financial planning advice
Widespread industry endorsement of the CFP designation as the single voluntary
standard for financial planners in Canada has largely resulted from the efforts
of the seven organizations comprising the Council's governance structure. These
organizations whose members and missions deal with the personal finance of others,
actively promote the CFP to their members and stakeholders and publicly endorse
the designation in their promotional and public affairs initiatives.
As industry support continues to grow, FPSC is increasingly focussing its communications
efforts on heightening public awareness of the CFP standards and how they ensure
Canadians have access to competent and qualified financial planning advice.
FPSC is now an active participant in industry and consumer trade shows across
the country and is launching its first TV advertisement this fall. Its newly
designed website, to be published in September, will host a consumer search
feature that will allow Canadians to find a qualified financial planner nearest
them, as well as financial planning tips from CFP professionals.
FPSC launches consumer survey to define "information gap"
The "information gap" referred to in the second Stromberg Report,
is one about which FPSC is deeply concerned. To better serve the consuming public
by identifying competent and ethical financial planners, FPSC is seeking to
discover that which the Canadian consumer currently needs to know more about
in order to make prudent choices about financial planning and the individuals
from whom they seek professional planning advice.
FPSC has launched two surveys. The first was completed this summer and questioned
almost 500 CFP professionals about the most frequent misconceptions clients harbour
about financial planning. The second consists of in-depth 20-minute telephone
interviews about financial planning - the process and the professionals offering
advice - with a representative sample of 750 adult Canadians. Hart and Associates,
an independent research firm located in Toronto, is conducting the research.
The results will be shared with the public and all other interested parties
this fall.
FPSC CFP professional survey confirms consumers are not adequately informed about financial
planning
The results of the CFP professional survey completed this summer indicated that most
often consumers mistake financial planning with investing, fail to evaluate
financial plans periodically and neglect to set measurable goals. Other significant
misconceptions identified are: clients think financial planning is the same
as retirement planning; they expect unrealistic returns on investments; they
don't understand how advisors are compensated; they are looking for quick financial
fixes instead of long term strategies; they don't understand that good professional
planning advice is largely dependent on good information from clients, and they
believe financial planing is primarily tax planning.
CFP®, CERTIFIED FINANCIAL PLANNER® and are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planners Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB.
are certification marks