Advisor associations prep for busy 2005

(December 30, 2004) Canada’s three main advisor associations have set their agendas for 2005, with advocacy initiatives high on the list.

At Advocis — the country’s largest advisor group with 15,000 members — regulatory reform and advisor professionalism will be the priorities, says president Steve Howard.

“There are complementary elements within that,” Howard explains. “We’re distinguishing between capital market regulation and the regulation of advice. The distribution of products should be regulated within the current licensing regimes. But those regimes should mirror the insurance council approach that has been applied successfully throughout Canada.”

Under the Advocis model, financial advice would be regulated by an independent professional body, which would set standards for advisors, such as a requirement to hold a professional designation and follow codes of conduct and practice standards.

“The securities regulatory model is broken, the insurance council model is not,” Howard adds. “And we’ll be arguing through the next year that the securities model should move to the insurance model.”

Advocis faced some criticism recently over its decision to raise fees. But Howard defended the increase, arguing that the association needed to bulk up in order to increase advocacy and public relations efforts.

Besides, Howard argues, reduced rates on Advocis’ new in-house errors and omissions insurance program — scheduled for rollout early in the new year — will more than compensate for the fee increase. “It’s unfortunate timing, but advisors do have that to look forward to next year and in the years beyond.”

The issue of designations will be one of the main concerns at the 4,000-member Independent Financial Brokers of Canada (IFB), says president David Barber.

“We know that the vast majority of agents and brokers do not have designations, but for those who do, these designations represent a considerable investment of time and effort to have achieved,” Barber says. “Since we know that present members of IFB, and those who may wish to become members of IFB in the future, have expressed concerns regarding their designations and the ability to continue to use them regardless of their affiliations, it is our intent in 2005 to explore the best way possible to ensure that they will be able to do so.”

Barber is indirectly referring to the CLU designation, which is run by Advocis. Advisors who leave Advocis can no longer use the CLU mark, although IFB will grandfather existing CLUs into the Chartered Financial Service Broker (CFSB) designation.

Telemarketing will likely be on the agenda for both IFB and Advocis next year. Ottawa has introduced do-not-call legislation and, if passed, the CRTC will be asked to set up a do-not-call registry or list.

“Our members, who do some cold calling, but not a lot, should be excluded,” says IFB executive director John Whaley. “I don’t think the public perceives that as a nuisance, because they are calling to make an appointment, they are not calling to sell you something directly.”

“There is a demand for consumers to have their privacy respected and we all get frustrated with phone calls during the dinner hour,” says Sara Gelgor, vice-president of regulatory affairs at Advocis. “But that has to be balanced with the ability to carry on business,” adds Gelgor, who says Advocis will likely be participating in consultations at the CRTC level, if the legislation is passed.

Keith Costello, managing director at the Canadian Institute of Financial Planners (CIFPs), says his group’s primary focus will be extending its reach and services. “One of the things we’re doing in 2005 is developing chapters across the country.”

While the association already has informal chapters, Costello plans to have full-fledged chapters up and running in Vancouver, Edmonton, Calgary, Saskatoon, London and Toronto by March 1, 2005.

Costello puts the current membership at about 1,650 planners, on track for the CIFPs target of 2,000 by the annual meeting in June.

The organization is working on alliances with companies, which would see blocks of employee planners brought into the organization, as well as sponsorship for the institute and its conferences.

CIFPs is developing a best-practices manual, which will be aligned with the practice standards set forth by the Financial Planning Standards Council (FPSC).

“We will also continue on the advocacy front, dealing with the regulators on the fair-dealing model, making sure that whatever adjustments they make, the planner’s going to be part of the solution,” he says. “We feel very strongly that the planner has nothing to fear from this. They’re the higher standard.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com,with additional reporting by Steven Lamb.

(12/30/04)