School may still be out for summer, but some would-be financial planning professionals could find themselves more focused on education regardless of the season.
That’s because a degree will soon become a prerequisite for new candidates to earn the Certified Financial Planner (CFP) designation. The requirement is part of changes to CFP certification programs and requirements that were announced last November and that roll out this year and next.
Specifically, new applicants for CFP certification must hold a post-secondary degree from an accredited college or university, effective April 2022. (There are a couple of exemptions; for details, see FP Canada’s CFP Certification Policies.)
The degree requirement aligns with that of FP Canada’s partner, the Institut québécois de planification financière (IQPF). Quebec regulates the title “financial planner,” and the IQPF is the only organization in that province authorized to grant the financial planning diploma required to apply for a licence from the provincial securities regulator to use the title. A degree has been a prerequisite for the IQPF’s diploma since 2005, and has ostensibly contributed to a greater pass rate for the IQPF exam.
The exam’s pass rate is about 85%, says Jocelyne Houle-LeSarge, IQPF president and CEO. Before a degree was required, the pass rate was about 60% to 68%, she estimates.
In contrast, the pass rate of those who took the CFP exam in Canada last November was 69%; in June 2019, it was 61%. (The June exam saw a record number of exam writers ahead of changes to certification.)
FP Canada said in an emailed statement that the purpose of the degree prerequisite is to provide “enhanced confidence” that CFP professionals have the skills required to serve clients. The CFP Board in the U.S., where a degree is also required for CFP certification, says it has no information on whether the requirement results in better outcomes.
Degree requirements are hardly new. FP Canada noted in its statement that a degree requirement has been introduced for professions such as accountants, engineers, lawyers and nurses as a prerequisite to certification, and by 12 of the 26 organizations that grant the CFP designation worldwide (including the CFP Board and the Financial Planning Association of Australia).
“In a world where information is readily available at the click of a button and individuals can easily complete fundamental financial transactions through online apps, the value of the human advisor is in the higher level of critical thinking and problem solving skills and judgement gained through higher education,” FP Canada said.
The requirement could prove challenging for some. StatsCan reports that just over one-quarter of adults (28.5%) had at least a bachelor’s university degree in 2016, with most university graduates living in large urban centres in Ontario, B.C., Alberta and Quebec.
The figure aligns with Jason Watt’s experience in the classroom. As CEO at Business Career College in Edmonton, as well as a full-time instructor, he estimates that about 30% of financial services professionals who enrol for continuing education at the college have degrees.
Those in rural areas without universities could be at a further disadvantage, especially if they’re older and financial services is their second career.
“If you’re leaving the trades or you’ve built and sold a business, [financial services] can be a good place to land,” Watt says.
FP Canada says on its website that most of its candidates already meet the requirement. In its emailed statement, the organization said no potential CFP candidates have expressed concern about the requirement — including those in small or remote communities.
It added that an FP Canada–approved online degree program is offered by Athabasca University.