Many planners against designations

Some are satisfied with the status quo, others eschew designations as meaningless initials and a third group welcomes the change.

Many of the planners surveyed by Investment Executive in the first annual Planners’ Report Card believe the existing Certified Financial Planner designation, administered by the Financial Planners Standards Council of Canada, and the Registered Financial Planner designation conferred by the Canadian Association of Financial Planners could serve as a national standard. Some planners insist that no particular certificate should be required. Not surprisingly, this opinion is popular among planners who do not hold a professional designation.

Less than half – 162 or 45% – of those polled hold at least one professional designation, usually CFP, RFP, or both. Other designations held by those questioned in the survey include Certified General Accountant, Certified Management Accountant and university degrees such as Bachelor of Arts. But when respondents from Primerica Financial Services Inc., where no survey participants have a professional designation, are taken out of the equation, the numbers are about even: 162 (49%) have a designation, while 168 (51%) have none.

Still, excluding Primerica, 60%-70% of respondents who don’t hold official designations are currently enrolled in a CFP course. Most of the non-designated planners who are not studying are veteran planners with 10-20 years experience. So the trend among newer industry professionals is toward education and accreditation.

At Primerica, only two of the 30 planners surveyed are working on a CFP course. Another Primerica planner, who has written the CFP examination and failed, has no plans to try again.

While there is a general consensus among people who call themselves financial planners that some form of designation is necessary, opinions vary on what that standard should be and how it should be administered.

‘Ultimately, it’s in the consumers’ best interest – and if that’s the case, it’s in the profession’s best interest – to ensure that those people who represent themselves as planners have the training and education,’ says a veteran Mississauga, Ont.-based planner . ‘The only way you can do that is to ensure that you have the designations.’

A member of the executive of CAFP during the 1980s and early ’90s, he says such industry standards were originally developed to assure clients that people who called themselves financial planners were indeed qualified to manage other people’s money. A properly administered designation should indicate that the planner has such essentials as adequate training, experience and errors and omissions insurance.

But not all planners agree.

‘Ninety-eight per cent of people in this business are sales people,’ says Kevin Rice, an investment planning consultant with Fortune Financial in Rothesay, N.B. Rice believes commission-based planners don’t need designations since they are primarily involved in ‘pushing whatever products your investment house is advising you to sell.’

A nationally recognized designation would still not deter those few dishonest planners and advisors who would mismanage or misappropriate clients’ funds, he says. Those investment professionals who do make headlines by running afoul of the regulators and the law usually have the requisite professional designations, he says.

Rice, who has been a planner for 11 years, doesn’t hold any professional designations but he is working on a CFP program, only because he believes he will benefit from the knowledge afforded by completing the course.

‘In this business there should be guidelines. But just because you have all these initials behind your name doesn’t mean you’re going to have the client’s best interest at heart,’ he says.

Some planners, while agreeing that a standard must be established, wonder if the Canadian Securities Administrators is the right body to impose it. ‘The securities commissions don’t care about education. They care about revenue generation,’ says another Fortune rep.

Meanwhile, some companies already have their own minimum educational standards in place. At Investors Group Inc., for example, all representatives are required to complete an in-house training program at the company’s Winnipeg headquarters, followed by periodic training seminars held at local offices. Furthermore, they must have CFP designations within five years of joining the firm.

Toronto’s Equion Group Ltd. has a similar policy. Reps must be members of the CAFP when they join the firm. New reps without CFPs must enroll in a program. Once they get the designation, they must progress to an RFP.

Equion reps are encouraged – but not required – to also obtain an insurance licence.

‘Between the IDA with their new continuing education requirements, CAIFA with their continuing education requirements and CAFP with their continuing education requirements, coupled with attendance at our own professional development days, I think that sets a fairly high bar within the industry,’ says Equion president Bill Best. The CSA proposal would be an improvement.