“‘I’m mad as hell, and I’m not going to take it anymore’—that was the mantra propelling me to take a leading role in founding a new financial planning association in Canada,” laughs Julia Chung, CEO and senior financial planner at Spring Financial Planing in Vancouver. “I knew that Canadians deserve better, and I knew that, working together with a team of like-minded people, I could help deliver better, and so—at last—here we are.”
Chung is talking about the newly-launched Financial Planning Association of Canada (FPAC), a membership organization for financial planners that aims to elevate the standards for financial planning across Canada. Chung is the current vice-president of the association’s board of directors.
“The goal of the association is two-pronged,” says Chung. “We want to provide a way for financial planners who are actually doing comprehensive financial planning, and not solely product sales, to participate in an association of like-minded planners; and to set themselves apart for Canadians who are looking for financial planning services.” The association launched in November 2019 with 100 founding members, after more than a year of preparation.
Clarity on what FPAC members offer to clients
What FPAC members offer is distinctively different from what many Canadians have experienced when seeking financial guidance. Advisors may offer little more than a sales pitch, and that’s led clients to have some serious trust issues. A study conducted by Leger found that two-thirds of Canadians don’t use a financial planner—and, among those, 22% said they didn’t use a planner because they didn’t know who to trust, and 20% said it’s because they’re confused and overwhelmed by the industry.
“We want Canadians to feel confident that when they work with a planner, they’re getting financial advice and support that’s in their best interests—selected from a full slate of options, free of hidden commissions, and delivered in keeping with the client’s whole financial picture,” Chung says. “Over time, we want to transform the financial planning industry into a true profession, like other regulated professions in Canada, such as accountants, actuaries, or lawyers.”
In order to join FPAC, planners must hold the Certified Financial Planner (CFP), Registered Financial Planner (R.F.P.) or, in Quebec, the financial planner (F. Pl.) designation. (Those studying for any of the above designations, working in affiliated industries, or retired from practice can also join as student or affiliate members, or as emeritus members if they want to remain involved in furthering the goals of the association after they have retired from active practice.)
The organizations that award the CFP, R.F.P., or F. Pl. designations generally define financial planning as a multi-step process, starting with establishing the planning engagement and gathering client information, analyzing the client’s information to identify and evaluate appropriate strategies to optimize the client’s situation, then presenting the plan, including recommendations and implementation strategies.
In keeping with these practice standards, the association requires that members take a thorough and complete approach to addressing the needs of their clients.
Putting the needs of clients first
Once they’re in, planners must commit to a set of principles for the financial planning profession set out in FPAC’s Charter. The principles focus on setting standards for the educational competency of planners, outlining and building a career path for future planners, and providing transparency in all dealings with clients.
Members must also agree to adhere to a “fiduciary pledge” contained in the Charter, which commits them to “putting the needs of clients first, ahead of my needs or the needs of any other party; and acting with the skill, care, prudence, diligence, loyalty and good judgement of a fiduciary, rooting my professional practice in evidence-based advice.” The pledge further requires that members attempt to avoid and minimize any conflicts of interest and fully disclose all sources of compensation.
In exchange, planners can benefit from the association’s resources, designed to help them develop as professionals. As the association grows, these will include an online forum for members, as well as planning and practice management resources developed by association members and with the support of academics and others.
Defining new standards for Canada
In building the association, says Chung, “we focused on the guidance provided by the planning profession in the U.S., where consumers can readily find planners who operate under fiduciary standards, and where financial planning has generally moved much further along the path to being recognized as a profession.”
Unsurprisingly, Chung says, asking financial planners to pledge to act as fiduciaries in their dealings with clients has led to the most discussion as the association launched. “We think the requirement to act in a client’s best interests is actually quite straightforward, and we’ve attempted to set out guidelines that show how planners can do exactly that.” However, she adds, “we know this is a new area for the profession; ideally, association members will work together to further define and develop the idea of a fiduciary standard, so planners can abide by it, and consumers can look for it.”
Going forward, Chung says, the association looks forward to “shifting the ground” to create a more level playing field between financial planners and their clients, for the benefit of all Canadians.
Alexandra Macqueen is a Certified Financial Planner and retirement expert providing advice through Pension Acuity Partners. She is also a founding member of the Financial Planning Association of Canada, with a seat on the founding board of directors.
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