Setting the Bar for Financial Advisors — Sort of

by | Mar 6, 2024 | Take 5 Articles

Chances are you’ve met with people who describe themselves as financial advisors or financial planners. Fortunately, in some provinces, you’ll soon be able to challenge them with two words: Prove it.

Unfortunately, different provinces are going in different directions.

Currently, tens of thousands of Canadians who work in financial services use one or both job titles. Nor are they regulated by an independent body that mandates continuous learning to maintain their designation.

Ontario was the first province to try to fix that. It passed its Financial Professionals Title Protection Act in 2019 and, as of March 29 this year, the title of financial advisor can be used only by individuals who have met the requirements of a credentialing body that has been approved by the province’s new regulatory body, the Financial Services Regulatory Authority (FSRA).

Self-described “financial planners” in Ontario have another two years to get their credentials in order, since the government has determined that this title carries higher requirements for education and training.

Saskatchewan passed its legislation in 2020 and is working on supporting regulations. Manitoba and New Brunswick are at earlier stages of the process. However, one thing is already clear—they’re not necessarily following in Ontario’s footsteps.

Why Ontario falls short

Saskatchewan is exploring different requirements for the financial-advisor designation, which are closer to or akin to that of a financial planner. In its Notice of Proposed Regulations released in July 2022, it noted: “While taking this alternate approach may decrease harmonization with Ontario’s framework, it would also potentially improve…alignment with client expectations.”

Benefits Alliance (BA) agrees with Saskatchewan’s path, for consumers’ sake. “Whether it’s financial advisor, financial planner or financial consultant, we need to capture these titles in one bucket that conveys a higher level of education, experience or service,” says Todd Stephen, Vice President, Employee Benefits & Pension, Selectpath Benefits and Financial in Saint John, New Brunswick, and Chair of BA’s advocacy committee. “That didn’t happen in Ontario.”

What is a financial advisor in Ontario under the new rules? As described on FSRA’s website, they must have “technical knowledge of at least one common investment product” plus expertise to make recommendations for that product(s).

In other words, “a licence to sell life insurance is enough to call yourself a financial advisor in Ontario,” says Mike Skube, President, mls Financial Services in Thunder Bay, Ontario, and a member of BA’s advocacy committee. “That’s essentially no different than what was already happening—with the exception that people without any licence can no longer call themselves a financial advisor.”

Originally, Ontario had proposed that both financial advisors and financial planners require credentialing beyond a license to sell products. After consultations with industry stakeholders, including banks and insurance companies, it lowered its requirements for financial advisors.

“Industry insiders may be able to articulate the new differences between a financial advisor and a financial planner in Ontario, but 99 per cent of the population will not be able to because up till now the titles have been pretty much interchangeable. We must keep things simple,” emphasizes Stephen.

The way forward

Summarizes Skube: “Consumers need to know that if they talk to a financial planner or advisor, they know they’re talking to a fully qualified person. And if they’re talking to an agent or a salesperson, they know they’re talking to someone who sells the product.”

BA proactively approached Saskatchewan more than two years ago, when it was considering its course of action following events in Ontario. They’ve established an ongoing dialogue, notes Skube. “They really liked the fact we were advisors asking for a higher standard,” he recalls, adding that BA is committed to developing similar relationships with Ontario, Manitoba and New Brunswick.

Skube’s most recent meetings with the Financial and Consumer Affairs Authority, Saskatchewan’s regulatory body, and Justice Minister Bronwyn Eyre occurred in late 2023. “They’ve been working diligently trying to make this work at a higher level for the advisor designation. We hope this will help pave the way for Ontario to ‘harmonize up’ to align with what they’re doing,” he says.

BA is also seeking to set the stage for title protection across the board within financial services, including for employee benefits.

“We’re drawing attention to our industry, which is like the forgotten cousin of financial services,” explains Stephen. “We’re supporting this initiative because it’s a way in to expand to other specialties or sub-specialties in the financial services world. Be it a financial advisor, investment advisor or benefits advisor, these titles must convey a higher level of knowledge, expertise and service, and be held to a higher standard.”