At one-year mark, investor advocates say Ontario’s title regime adds confusion, not clarity

A year has passed since Ontario’s rules to protect the titles of “financial advisor” (FA) and “financial planner” (FP) came into force. But instead of celebrating greater consumer protection and higher industry standards, investor advocates are criticizing the regime for adding to client confusion and offering little incentive for financial advisors to buy in.

Under the province’s title protection rules, effective since March 28, 2022, only those with a credential approved by the Financial Services Regulatory Authority of Ontario (FSRA) can use the FA or FP title (with transition periods extending until 2024 for FAs and 2026 for FPs).

Ontario’s title protection was “built to fail” when it comes to consumer protection, said Laura Tamblyn Watts, president and CEO of CanAge in Toronto. (Tamblyn Watts, who is chair of FSRA’s consumer advisory panel and a member of the new SRO’s board, spoke to Advisor.ca on behalf of CanAge, not her other industry roles.)

“Instead of taking a regime like Quebec’s … which is very clear to consumers, we have a regime that has two names … and does not cover off the myriad other titles that are very confusing to consumers,” she said.

The Autorité des marchés financiers (AMF) regulates the FP title in Quebec and restricts others. For example, advisors who sell mutual funds are “mutual fund dealer representatives.” No one in Quebec can call themselves a financial advisor (or financial adviser) because it’s deemed too similar to financial planner.

“If you go to Quebec, you as a financial professional know what you’re called and what is required for the title, and the consumer does too,” Tamblyn Watts said.

The concern was never that the industry is rife with financial advisors operating with no qualifications, said Jean-Paul Bureaud, executive director of FAIR Canada in Toronto. “The problem has always been and continues to be, ‘What are you and what do you do?’” he said. To that end, Ontario’s title protection has “made things worse, not better. There’s a real risk of consumer harm here.”

That’s because the average consumer would expect someone presenting themselves as an FA to be able to provide comprehensive financial advice, Bureaud said; yet, a mutual fund salesperson in Ontario can use the FA title if they’ve taken the Canadian Securities Institute’s multiple-choice Canadian Securities Course and Advanced Mutual Funds Advice.

Under Ontario’s title protection, FAs need technical knowledge of at least one investment product and must be able to provide suitable financial and investment recommendations based on their licence or designation.

“I think most people would say, ‘No, that doesn’t pass the smell test,’” Bureaud said.

The right approach would have been to create a common standard for the FA role and allow only those who meet that standard to call themselves a financial advisor, he said.

FSRA maintains that Ontario’s title protection is an improvement over no standards or requirements.

“For the first time, there is a minimum standard for proficiency and there are expectations in terms of member conduct for each of the credentialing bodies,” said Huston Loke, FSRA’s executive vice-president of market conduct.

Addressing criticism of the regime’s product-based approach versus some other proficiency standard, he said, “It’s a different discussion if people say, ‘You are not providing valid advice if you’re selling mutual funds.’” Someone with an approved credential — which, again, means they have the required proficiency and must abide by a code of conduct — provides valid advice, he said, “and that helps the consumer.”

As things stand, Bureaud said he wondered how many advisors will bother paying for the FA title.

Anecdotally, Ken Kivenko, president of Ontario-based Kenmar Associates, said none of the investors he’s spoken with has an advisor who uses the FA title, and experienced investment professionals with designations have told him they aren’t interested in it (they’re “investment representatives,” he said). Further, plenty of other titles remain in play, he noted. “I don’t see [advisors] paying for an FA title … from a [credentialing body] in Ontario,” he said. “I just don’t see it.”

So far, about 2,000 people in Ontario are permitted to use the FA title, based on credentialing body reporting, FSRA said. That compares to about 15,000 people permitted to use the FP title. (See “Claiming the titles” below.)

An unknown is the impact of the new self-regulatory organization, which is in talks with FSRA about its role in title protection, such as the potential for it to be a credentialing body.

Referring to such a development, Bureaud said, “That is only for investments, and financial advice is a much broader concept.”

Loke said most Canadians need “solutions that start with people that they know, people that may be in their community,” selling mutual funds, insurance or other services. Over time as title protection is implemented, it will be important for these retail clients to be able to identify FA title users, he said.

FP vs. FA

FP title standards are generally seen as more robust, given that financial planning has globally recognized standards. Kivenko cited financial planning as “one area of improvement” arising from Ontario’s regime.

“There’s now going to be some regulation other than in Quebec for the financial planner,” he said. “Financial planning is going to be more professional” and more recognized by investors. He noted, though, that credentialing bodies’ enforcement powers are limited to revoking credentials, whereas in Quebec the AMF can strip FPs of their licences.

As consumer education campaigns get underway in Ontario, a distinction should be drawn between the two titles, said Michael Thom, managing director of CFA Societies Canada in Toronto. With no universal understanding of the FA role, “any marketing of that [title] to the public potentially rests on a flawed foundation,” he said.

A further confounding factor is that FSRA so far approved nine credentials (for the two titles combined) from four credentialing bodies. Thom called out the “equivocation” of “materially different” credentials and credentialing bodies.

“There are those [credentialing bodies] that have made genuine attempts and investments in process, curriculum quality and people to do this right,” he said, “and they shouldn’t be thrown in the trough with others that are attempting to very plainly make a buck.”

Further, some credentialing bodies don’t have a history of “holding themselves professionally accountable from a complaints process,” he said.

Jason Watt, vice-president of Business Career College in Edmonton, said he “naively” thought only a few quality certifications would be approved. The “broad set” of approved credentials with no “useful distinction” for consumers is a frustrating outcome, he said. “Am I any more able to choose based on what somebody has on their business card … whether that person is suitable to deal with my financial questions?” he asked. “The answer is no.”

The average consumer will be “lost and confused,” Bureaud said, as they attempt to understand various credentials, credentialing bodies and their differences.

Further, “What is going to prevent a race to the bottom?” Kivenko said, as financial advisors shop for the cheapest, easiest credential to get.

Loke positioned the approved credentials as evidence of the regime providing flexibility as well as choice for retail investors. “You can get a greater level of access for consumers to receive the advice they need,” Loke said, noting that not every investor is looking for financial planning, for instance. Investors can “match up their needs with the qualifications and standards” of a financial professional, he said.

FSRA put terms and conditions — related to complaint handling, disciplinary action and ethics curriculum, among other things — on three of the four credentialing bodies it approved. FP Canada, which oversees designations approved by FSRA for FP title use and which has an enforcement track record, was the exception.

During Saskatchewan’s consultation last fall on proposed title protection rules, FP Canada suggested in a submission that no credentialing bodies or credentials should be approved if extensive terms or conditions are required — which it cited as an indication that the credentialing body or credential hasn’t yet met the minimum standard.

Loke said the terms and conditions don’t represent red flags. “We have approved the credentialing bodies on the basis of their application in accordance with the framework,” he said. For example, credentialing bodies must have a registry of credential holders, and the related terms and conditions ensure that the credentialing bodies will work with FSRA, he said, as it develops an overarching registry for consumers.

As far as the credentialing bodies’ oversight and discipline of credential holders, “we are committed to supervising the area using a risk-based approach,” Loke said. FSRA will implement a supervision plan, looking at how the bodies manage their disciplinary processes, and will publish its findings, he said.

Saskatchewan and New Brunswick are both in the process of introducing title protection, with the other provinces expected to eventually follow. But given gaps in consumer protection, “I really worry about other jurisdictions importing Ontario’s model,” Bureaud said.

Kivenko said he holds out hope for Saskatchewan’s proposed regime, which includes education requirements for FAs related to planning. “This is a good baseline to start,” he said. “From this we could build.”

Watt was willing to imagine a potential positive outcome in Ontario. Referring to credentialing bodies that previously had no enforcement track record, he said, “Do you get disciplinary outcomes that actually help consumers? If you do, then maybe that’s enough.”

Claiming the titles

About 2,000 people in Ontario so far are permitted to use the financial advisor (FA) title, based on credentialing body reporting, FSRA said in an emailed statement. One approved credential for FA title use is the Canadian Securities Institute’s designated financial services advisor (DFSA), which officially launched in December. As of March 2, CSI had issued 1,607 DFSAs, the firm said in an emailed statement.

FSRA said 15,000 people so far are permitted to use the FP title. In Ontario, FP Canada said it oversees about 8,800 certified financial planners (CFPs) and about 800 qualified associate financial planners (QAFPs) — two of five designations approved by FSRA for FP title use.

Royal Bank of Canada said in an emailed statement that its Ontario bank branches use both titles, while its brokerage advisors use the FP title.

TD Wealth Financial Planning (TDWFP) said in an emailed statement that, nationally, more than 250 professionals with the firm wrote exams last year for the CFP and QAFP.

“Our goal is to be recognized as a world-class financial planning firm,” the firm said, and “setting a high bar in accreditation and planning expertise is a critical step in making this happen.”

Most TDWFP financial planners in Ontario already had one of the FP Canada credentials, the firm said, and the “small subset of planners” working toward a FSRA-approved credential are called “associate planners” as an interim title. Since the beginning of this year, financial planning associates (service and sales support) have been called “client service associate” or “client relationship associate.”

Title protection timeline

1998

• Quebec regulates “financial planner” and restricts other titles, under the Act Respecting the Distribution of Financial Products and Services

2019

• May 29: Ontario passes Financial Professionals Title Protection Act
• Aug. 9: Financial and Consumer Affairs Authority of Saskatchewan (FCAA) begins consultation on regulation of financial advisors and financial planners

2020

• July 3: Saskatchewan passes Financial Planners and Financial Advisors Act
• Aug. 13: FSRA consultation on proposed Financial Professionals Title Protection Rule begins

2021

• May 11: FSRA begins second consultation on title protection rule
• July 22: FSRA consultation on title fee structure begins
• July 28: FCAA consultation on proposed rules begins
• Aug. 10: Financial and Consumer Services Commission of New Brunswick (FCNB) consultation on title regulation begins
• Nov. 15: FSRA consultation on applications and supervision guidance begins (includes a requirement that credentialing bodies’ codes of ethics include the principle of putting the client’s interest first)

2022

• March 28: Ontario’s title protection rule (Financial Professionals Title Protection Rule) comes into effect, with transition periods
• April 11: FSRA approves first four credentials: CFP, QAFP, CLU (for FP title use) and PFA (for FA title use)
• May 4: FSRA approves PFP credential (for FP title use)
• June 8: FSRA approves RRC (for FP title use) and RFRA and RRA (for FA title use)
• July 20: FCAA’s second consultation on proposed rules begins
• Sept. 1: FSRA approves DFSA (for FA title use)
• Nov. 8: At the Independent Financial Brokers’ fall summit in Toronto, FSRA said it received one consumer complaint about unauthorized use of a protected title. No action was taken given the transition period.
• Nov. 28: At a meeting with the stakeholder advisory committee for title protection, FSRA said its supervision of credentialing bodies will focus on four areas in 2023–24:
  • the principle of putting the client’s interest first
  • resource stress testing
  • complaint handling process
  • disciplinary process
• Dec. 22: FSRA said credential/credentialing body approvals and framework implementation will continue into the first half of 2023

2023

• Feb. 28: FSRA publishes summary of terms and conditions on approved credentialing bodies
• March 31: Deadline for credentialing bodies to submit annual information returns to FSRA
• March 22: New Brunswick introduces Bill 29, Financial Advisors and Financial Planners Title Protection Act

Looking ahead

• June 30, 2023: FSRA’s focus on credential/credentialing body approvals and framework implementation slated to end
• 2023-24: FSRA to launch registry (for consumers) of all credential holders
• March 28, 2024: Transition period ends for those who used the FA title before Jan. 1, 2020; they must now have an approved credential to use the title
• March 28, 2026: Transition period ends for those who used the FP title before Jan. 1, 2020; they must now have an approved credential to use the title