The pros and cons of professional associations

When financial advisors assess their professional associations, some identify a misalignment of principles while others see opportunities to mentor the next generation of advisors.

Associations such as Advocis and the Conference for Advanced Life Underwriting (CALU) take positions on topics important to the industry. In recent years, for example, Advocis has made submissions in support of deferred sales charges (DSCs), title reform, and advisor chargebacks for segregated funds, while CALU has lobbied on intergenerational business transfers and RRIF rules.

Meagan Balaneski, portfolio manager with Cup of T Financial Planning in Vermilion, Alta., said she has a hard time “walking the same pathway” as Advocis. “I started to question their ethical behaviour when they were fighting for DSCs to remain,” she said.

But Advocis is an important resource for newer advisors, who require direction to become professionals, said Brad Brain, portfolio manager with Brad Brain Financial Planning and Aligned Capital Partners Inc. in Fort St. John, B.C.

Advocis can “serve a vital role in the evolution of the industry and the development of the next generation of advisors by giving them a home for like-minded people who want to be professionals,” Brain said.

Balaneski said Advocis introduced her to CALU, which focuses on advanced financial and tax planning. The association was created as part of Advocis three decades ago and requires its members to also be members of Advocis — a requirement Balaneski said she disagrees with.

CALU membership requirements are at the discretion of CALU’s board and membership, Advocis said in an emailed statement.

Jason Pereira, partner with Woodgate Financial in Toronto, said he was an Advocis member in previous years solely to be a CALU member, but the requirement became untenable.

Referring to Advocis, Pereira said, “How do you claim you stand for professionalization of the industry when you have done everything you can to defend the deferred sales charge … defend embedded compensation, defend commissions and do everything possible to kill fiduciary responsibility?”

Advocis has argued against a statutory fiduciary duty, saying the common-law standard is sufficient, and against an embedded commissions ban and the DSC ban on the grounds that such measures would reduce access to financial advice.

“A true profession has transparency and duties of care at the highest level,” Pereira said.

He co-founded the Financial Planning Association of Canada (FPAC) in 2019, and its members — credentialed planners — adhere to charter principles, including fee transparency and a fiduciary standard. A ban on embedded compensation is among the association’s objectives.

FPAC has about 220 members, compared to CALU’s 442 (excluding associate members, who are unlicensed and not required to be Advocis members), and Advocis’ roughly 10,000 (based on annual reports).

Pereira submitted a motion at CALU to review dual membership, so members could belong to CALU without being Advocis members. In response, CALU created a task force in 2021 that reviewed the requirement and called for submissions. The task force ultimately upheld the requirement, saying that, among other things, speaking on behalf of both Advocis and CALU strengthens CALU’s advocacy. Following the review, Pereira dropped his CALU/Advocis memberships.

Still, the task force also recommended reviewing dual membership every three to five years.

Balaneski dropped her CALU membership this year, though a key part of that decision was the demands on her time from her young family. She was also studying for the trust and estate practitioner designation, which she passed this year. She remains an Advocis member to maintain her chartered life underwriter designation.

Her preferred association became clear once she understood who she was professionally, she said. “I’m a planner, and I found the IAFP [Institute of Advanced Financial Planners].”

IAFP members have planning as their main vocation, and many have unique specializations, she said, which makes the association’s forum a valuable resource.

Support to become a professional is what concerns Brain, who mentors newer financial advisors, and formerly mentored Balaneski. Professionals pursue “relevant” designations, adhere to a code of conduct, commit to continuing education, and carry errors and omissions insurance, he said — all things required by Advocis.

He also noted that many associations do great work, and differences should be embraced. “As long as advisors have their focus on doing the right things for the client, there are different ways that can be done,” with different designations, career paths and business models, Brain said. “It all adds value.”

Talk of one association or one way of doing things being better than another is “sometimes petty silliness” and “egos,” he added.

Brian Shumak of Brian Shumak Financial Services in Toronto said every advisor should choose the organization that’s relevant to them.

He noted Advocis’s advocacy, such as helping to keep insurance and banking separate to avoid tied selling, as well as its educational resources. “I wouldn’t have the background in my education, on the financial side, without Advocis,” Shumak said. While he doesn’t always agree with Advocis, he doesn’t expect to, he added.

Shumak also said he wasn’t a big fan of CALU’s requirement that members have a certain income level. Pereira also noted the inadequacy of income as a threshold for association membership, specifically in reference to mentoring new advisors.

“Just because you make a lot of money doesn’t mean you’re doing the right thing for your client,” Shumak said.