(From the April 2022 Edition of eFORUM)
By Vikram Barhat
The long overdue regulation of “financial advisor” (FA) and “financial planner” (FP) titles has come into effect, as of March 28. The regulation grants the regulator enforcement authority over individuals for unapproved use of restricted titles.
The new regime dictates that the two titles are restricted to those who hold recognized credentials from an approved recognized credentialing entity. “Using a restricted title without a registered credential is now against the law,” said Greg Pollock, president and CEO of Advocis, speaking at an Advocis webinar.
The long-awaited regulation offers consumers clarity and confidence when working with qualified financial professionals.
“Consumers use these titles as proxies for the advisors’ education and professional standards,” said Pollock, adding that “this is finally true.”
The webinar also covered how the new regulation addresses potentially confusing tiles such as “financial consultant” or “wealth advisor.”
The Financial Services Regulatory Authority of Ontario (FSRA) is taking a pretty narrow approach with regards to confusing titles, said James Ryu, vice-president, advocacy and general counsel, Advocis.
“FSRA seems to be focused on a syntax where you have the word ‘financial’ plus either the word ‘advisor’ or ‘planner’ and some other words,” he said, adding that this formula would capture titles like “financial wealth planner” or “financial investment advisor,” but not titles like “financial consultants” or “wealth advisor.”
Ryu expressed concern, however, that if FSRA’s restriction is too loose and consumers are harmed, then the framework won’t be achieving its consumer protection goals. Advocis, he added, will continue to work with FSRA and the government to make changes to strike the right balance.
The title protection framework will impact any advisor or planner who has ties to Ontario, either as a resident or serving clients who live there.
Pollock stressed the need for higher professional standards across the country, pointing out “many other provinces are signalling their interest in pursuing their own frameworks.”
Advocis would work “to ensure that these provincial frameworks are as harmonized as possible,” he added.
The discussion also focused on credentialing bodies that could supply valid credentials.
“FSRA has opened applications for entities that want to be credentialing bodies,” Ryu said. The qualified contenders must have a “robust improvement, investigations, and disciplinary process and need to have the resources and infrastructure [so as to] fulfill their consumer protection mandate,” he added.
Advocis has applied to be recognized as a credentialing body and expects to be approved.
“The rigour of each credential is going to be measured against the competency profiles that FSRA published for both titles,” noted Ryu, adding that Advocis had put forward the Chartered Life Underwriter (CLU) and the Professional Financial Advisor (PFA) designations for recognition for both the FA and FP titles.
Pollock noted that after carefully reviewing the Life Licence Qualification Program (LLQP), FSRA determined that it fell short in teaching key client-centric elements required for the FA level.
“We recognize that some of our members will be frustrated that an MFDA sales licence might qualify, but an insurance sales licence likely won’t,” he said.
There are no exemptions. In order to use the restricted titles, FA and FP, one must have recognized credentials, Ryu reiterated.
The only exemption offered is that those who have been using the restricted titles since January 1, 2020, may continue to do so for the transition period, which is two years for the FA title and four years for the FP title, both starting March 28.
“The point of this transition period is purely to give you time to obtain an approved credential,” said Ryu.