WealthManagement Magazine

Canada Struggles with Standards for Financial Planners

The Canadian Securities Institute, (CSI) the educational and testing arm of the Investment Dealers Association of Canada (IDA), has withdrawn its membership from the Canadian Financial Planners Council, the mutual fund-owned group that currently sets the standards--or non-standards according the CSI--for the more than 60,000 Canadian financial planners.Upon announcing its withdrawal, the CSI said

The Canadian Securities Institute, (CSI) the educational and testing arm of the Investment Dealers Association of Canada (IDA), has withdrawn its membership from the Canadian Financial Planners Council, the mutual fund-owned group that currently sets the standards--or non-standards according the CSI--for the more than 60,000 Canadian financial planners.

Upon announcing its withdrawal, the CSI said that its larger umbrella organization, the Securities Industry Advisory Council (SIAC), has decided to establish its own standards for anyone affiliated with a member firm who wishes to use the title Financial Planner.

SIAC is an industry group composed of member firms of the IDA and the four principal stock exchanges.

Under the plan, the CSI will establish proficiency standards that will include a licensing exam, ongoing educational requirements, ethical training and the establishment of supervisory oversight for planners working through member firms.

The decision to create new standards came as a result of long-standing tension between the CSI and its mutual fund-affiliated competitor, the Certified Financial Planners Institute. According to Dominic Jones, a spokesperson for the CSI, the Canadian securities industry considers the current designation of a certified financial planner virtually meaningless.

In order to gain strength and critical mass, the designation was handed out wholesale across the country when it was created two years ago. Unlike in the states, here the term certified financial planner means next to nothing, he says.

The creation of CSI requirements will mean that Canadian brokers wishing to use the CFP title will have to earn it via this new program, although some will likely be grandfathered, Jones says. However, because many of the individuals who currently use the title are unaffiliated, working at small fund distribution companies or as sole practitioners outside the purview of the IDA and Canadian exchanges, there is nothing in this plan to stop them from continuing to advertise themselves as planners.

One hope is that this becomes a way for consumers to differentiate between truly qualified planners who are under the strict supervision of an SRO and those planners who are not, says Connie Craddock, a spokesperson for the IDA.

However, because the smaller planners have a new trade group/regulator of their own, the Mutual Fund Dealers Association, which will undoubtedly vouch for their credentials, things might become more confusing than ever.

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