This isn’t just a regulatory oversight. It’s a ticking time bomb.

Imagine walking into a hospital and discovering that half the people in white coats had no formal medical training. That’s the current state of financial advice in Canada. While doctors, lawyers and accountants must meet rigorous national standards, financial advisors operate in a fragmented, under-regulated system that allows bad actors to thrive.

The stakes couldn’t be higher. Poor advice doesn’t just hurt individuals — it destabilizes the economy while Canada is in the midst of a financial reckoning.

If inflation is the fire, financial advisors are the firefighters. Yet, unlike their high-visibility counterparts, they quietly protect Canadians from financial ruin, often without the recognition or safeguards their role demands.

In a moment when every dollar matters, the lack of oversight isn’t just a personal risk — it’s a national economic liability. Canada’s weak regulations put consumers, and the economy, in jeopardy.

We’ve seen this story before. In the 2008 financial crisis, predatory lending and reckless financial guidance led to one of the worst economic collapses in history. More recently, crypto scandals have revealed how easily consumers can be misled by so-called financial experts with no real qualifications. The absence of regulation isn’t just a consumer protection issue — it’s an economic stability issue.

The cost of inaction is severe. Ripple effects increase reliance on government safety nets and slow national growth. Poor advice leads to mismanaged retirement savings, forcing more Canadians to rely on taxpayer-funded pensions. Amateur advisors amplify risky behaviour, fuelling volatility in investment markets. Financial literacy remains low, and many Canadians don’t realize they’ve received bad advice until their savings are gone.

The good news? The regulatory landscape is shifting. Ontario, through the Financial Services Regulatory Authority, has led the way in title protection, setting clear standards for who can call themselves a financial advisor or planner. Other provinces, including Manitoba, New Brunswick, Saskatchewan and Newfoundland and Labrador are following suit.

A national framework

But provincial patchwork solutions aren’t enough. Canada needs a national framework that does three things.

First, it should standardize title protection across all provinces. A financial advisor in B.C. should meet the same standards as one in Ontario. Fragmented regulation creates confusion and allows unqualified individuals to exploit gaps.

Second, it should mandate minimum educational and ethical standards. Consumers shouldn’t need a legal background to decipher whether their financial advisor is qualified. A simple, enforceable national standard should be the baseline.

Third, it should hold financial advisors accountable. Real penalties must exist for those who misrepresent their qualifications or provide harmful advice. Without consequences, regulation is just window dressing.

The federal government has a rare opportunity to use the current push for interprovincial harmonization to drive national reform. If policymakers are serious about economic resilience, financial stability and consumer protection, this should be at the top of their agenda.

The cost of waiting is high. The current system benefits only those who profit from consumer confusion. Banks, investment firms and independent advisors all have a stake in keeping financial advice a regulated profession. Yet too many stay silent, allowing the issue to remain unresolved.

We stand at a crossroads. We can choose to create a financial advisory industry that Canadians can trust — one that serves as a pillar of economic stability — or we can continue to look the other way.

Some will argue that stricter regulation will increase costs and reduce access to financial advisors. The reality? The cost is already being paid by Canadians who lose savings, make poor financial decisions or fall victim to unqualified advisors.

In an economic crisis, access to trustworthy financial advice isn’t a luxury — it’s a necessity. A nation that cannot trust its financial advisors is a nation on unstable economic footing. Canada’s policymakers need to act now to establish national, enforceable standards for financial advisors. If they don’t, the next recession won’t just be an economic downturn; it will be a financial catastrophe for millions who were led astray.

Kelly Gorman, CPA, CA, ICD.D is CEO of Advocis.

This article appears in the June issue of Investment Executive. Click here for link to Article