As transition ends for FA title, product pushes back in the spotlight

Egregious sales conduct at the big banks has made the news once again as protection of the “financial advisor” (FA) title shifts into full gear in Ontario.

The transition period ends for the FA title in the province on March 28. After that, people who used the title on or before Jan. 1, 2020, must have an approved credential to continue using it.

The transition comes hot on the heels of CBC coverage of bank branch employees — including what CBC called financial advisors — misleading clients and pushing them into products not in their best interests.

The coverage mentioned the need to better regulate financial titles, but it also inadvertently highlighted how title regulation falls short, at least in Ontario: Consumers expect that someone calling themselves a financial advisor can offer solid — if not comprehensive — financial advice, not pursue product sales.

Yet, under Ontario’s title protection, FAs must have technical knowledge about one investment product and must be able to provide suitable financial recommendations based on their licence or designation. Mutual fund licensing is the most popular approved credential to use the title (see table below).

Consumer advocates have criticized the province’s product-based approach, while the Financial Services Regulatory Authority of Ontario (FSRA) has lauded the establishment of a minimum standard of proficiency for financial advisors for the first time.

Financial advisor credentials by the numbers

FSRA-approved credential for FA title	Number of credentials
Mutual fund dealing representative	36,030 (61.5% of credential holders)
Registered representative	15,538
Portfolio manager	4,093
Registered Financial and Retirement Advisor (RFRA)	2,459
Designated Financial Services Advisor (DFSA)	2,009
Associate portfolio manager	797
Registered Retirement Analyst (RRA)	82
Professional Financial Advisor (PFA)	67
Total FA credentials	61,075
Total FA credential holders	58,589 (Some advisors have more than one credential)

Harvey Naglie, vice-chair of FSRA’s consumer advisory panel and a board member of FAIR Canada, said he’s concerned with salespeople using the FA title.

“Is this [title protection] legislation perfect? Absolutely not,” Naglie said. “It has a lot of pitfalls.”

But he also welcomed the framework, and said he was looking at next steps. As the transition period ends, “it’s important that a [consumer] awareness emerges” about the title protection rules, Naglie said.

At least one bank has taken action in response to the rules. Toronto-Dominion Bank told Advisor.ca it has changed certain titles used in branches: “financial advisor” and “senior financial advisor” have become “personal banker” and “senior personal banker,” respectively, a spokesperson said in an email. (More on the banks below.)

Naglie suggested that the government and regulators focus on the “hard work” of educating the public about title protection. “It’s imperative that we empower consumers with the knowledge and the tools … they need in order [for regulators] to start effectively policing this legislation,” he said.

For example, consumers need a benchmark to assess the service they receive, and, when service falls short, consumers need to know which credentialing body to contact, Naglie said. The consumer advisory panel is also suggesting a whistleblower program for title misuse — at least initially.

“We are going to be pushing hard” to make the framework better for consumers, Naglie said.

Despite criticism of mutual fund licensing as a credential, Keith Costello, president and CEO of the Canadian Institute of Financial Planning (CIFP), said adding the Canadian Investment Regulatory Organization as a credentialing body is “a good thing,” given the regulator’s enforcement expertise.

And Costello expects continued industry interest in the CIFP’s FA credentials. Some financial firms “are looking for a different level of credential” for advisors, he said, that teaches more knowledge than licensing provides. He also said uptake could increase as insurance agents seek credentials.

From a consumer protection standpoint, Costello said he’s been impressed with FSRA’s oversight of the CIFP. Credentialing bodies must oversee their credential holders and have a complaints and discipline process, among other requirements.

As a credentialing body, “you have to make sure you’re doing what you signed up for,” he said. “We spend a lot of money and resources to ensure we comply with what FSRA wants.” That work is positive for credentials, advisors and ultimately the public, he said.

Further, Costello expects standards for the title to improve over time.

“There’s a good momentum out there — in Ontario and other provinces that are going to come onboard [with their own title protection] — that the standard will go up,” he said. He referenced financial planning knowledge for advisors, as Saskatchewan has proposed, as well as FSRA’s review of Ontario’s framework.

The standard “will evolve and be a good standard long term,” Costello said.

Ken Kivenko, president of Ontario-based Kenmar Associates, said in an email that his organization has suggested making the FA competency profile “more inclusive of skills than just product sales,” He said he was “confident FSRA will turn [the title protection framework] around over the next 18 months.”

FSRA has said it is reviewing the framework. In an email, the regulator said it will engage with stakeholders as it forms its recommendations for potential improvements to the framework and will post a public report in 2024–25.

Costello said his biggest request would be for the regulator to continue working with other provinces to harmonize title protection. Naglie warned about industry pressure to harmonize to the lowest common denominator.

“I sincerely hope that in working toward harmonization, we won’t settle … and instead try to aspire to the highest common denominator,” Naglie said.

FA title use at the banks

Advisor.ca asked the Big Six banks what changes they made as a result of Ontario’s protection of the FA title. Responses varied from a focus on licensing, to no longer using the FA title in branches, to simply confirming compliance.

At Royal Bank of Canada, employees in the retail branch network in all provinces (except Quebec) can use the FA title if they have the DFSA designation, the bank said in an emailed statement. (RBC was referring to employees who were not in financial planning roles.) The DFSA requires licensing and, for mutual fund reps, the Canadian Securities Institute’s Advanced Mutual Funds Advice.

The bank further said it has a “continuum of roles” supporting clients in its branch network and advice centres, with various titles including banking advisor, Invest By Phone advisor and financial planner (a protected title in Ontario and Quebec). All advisors in the continuum are licensed.

TD said it changed certain titles used in branches: “financial advisor” and “senior financial advisor” have transitioned to “personal banker” and “senior personal banker,” respectively, a spokesperson said in an email. These roles refer customers to “licensed and certified” TD wealth management experts, including financial planners, for support with more in-depth advice.

Bank of Montreal said it “is not making any changes at this time,” and Scotiabank and CIBC said they comply with the regulations.

Variations on the FA title, such as “senior financial advisor,” “financial advising consultant” and “financial security advisor” can’t be used by anyone in Ontario without an approved credential, but credential holders can use such variations.