With the markets being so volatile in the last little while people are more skeptical than ever. The skepticism really stems from fear – will this person know how to invest my money well and will I get a good return (as per the market)? The only way to reduce fear is to educate yourself and become aware. This is true for all parties – those giving their money to the investor and the one investing.

In the article, “Standards to be set for financial planners”, written by Jonathan Chevreau, National Post, June 1, 2011, it states that about 40,000 to 60,000 financial sales people hold themselves out as financial planners even though they lack the CFP or RFP (designations).

How do you counter this? Five financial planning organizations have created a national coalition to set firm guidelines for anyone wishing to call themselves a financial planner. Why I like this is that it is a checks and balance by those in the industry. These financial planners have worked hard for their designations and one person, who lacks the know-how,education and experience, can dilute that in the eyes of the consumer by his/her actions.

In past, despite efforts, there have bee no requirements for qualifications or professional oversight. Until now, only Quebec has regulated this. The Institut quebecois de planification financiere (IQPF) has a diploma as well you are required to have a permit from the regulator, Autorite des marches financiers or AMF which must be renewed yearly. Without both, Quebecers cannot call themselves Financial Planner, or anything that sounds close to that.

In other provinces, the closest to a required designation is the CFP (Certified Financial Planner) overseen by the Financial Planning Standards Council (FPSC). A runner up is the RFP or Registered Financial Planner from the Institute of Advanced Financial Planners. Both the FPSC and LAFP are coalition members.

The other two are The Financial Advisors Association of Canada and the Canadian Institute of Financial Planners (CIFP).

The issue is that while 18,000 people have their CFP designation another 40,000-60,000 people do not. The coalition wants to change this. The model for the Coalition is a practice that has long been established in other professions such as law, medicine and accounting. The feeling is that financial planners need to be held to similar standards- make them accountable and responsible for their choices and actions. Greg Pollock, Advocis president states, “until Canada raises the bar on standards for financial planners the public will not be amply protected from unqualified individuals who claim to be qualified when they are not.”

It’s still early days but the Coalition is creating a common set of national standards aimed at protecting consumers. The first step is declaring their statement of principles which states, those wishing to be financial planners will have to meet professional standards for education, experience, examination, ethics and professional duty of care, and be accountable to professional oversight.

This will allow the average person to cipher through those that know what they are talking about and have the preferred designation and those that claim and do not.

One comment I do have is that I hope the checks in balance that they put in place are independent. In other words, having dealt with lawyers, there have been times when I wanted to call the Law Society and I was told don’t bother because the person I want to complain about yields too much power and nothing will be done. Basically, the lawyers watch out for one another – same with doctor’s and same with accountants.

The one difference I see is that the qualified “Financial Planner” is as eager to rid of the “fakes” as the consumer is. I will support this endeavour. I will also like to see it go one step further and while designation is important that all financial planners be held accountable for their actions.

Let’s see what happens in the near future. Remember, it is us the people who are giving them our money, the ones in power!

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2 Responses to “Financial Planners need to be more Accountable and Responsible”

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