Financial planning should be regulated as a profession, says List

“I am very much of the opinion that financial planning is a distinct and separate professional service that is worthy of stature as a profession,” List said, “but it needs to be actually regulated as such.”

He pointed out that financial planning is often associated with the securities business, and sometimes considered among consumers simply to be a means to the trading of securities. But many of the activities that financial planners engage in are not regulated at all, he said.

Bill Rice, chairman and CEO of the Alberta Securities Commission, agreed that the securities commissions currently have a limited role to play in the regulation of financial planning since much of it does not directly involve the trading of securities.

He said it’s largely up to the industry whether to introduce regulations specific to financial planning, and that planners themselves are the ones in the best position to determine how best to move towards a profession.

“I think you people are the ones that ought to determine the standards, to set the standards,” he said. “There is an opportunity to add professionalism to the environment.”

Rice suggested that the securities commissions could potentially fulfill that regulatory role. He noted that the commissions already oversee the industry’s self-regulatory organizations, and therefore have platforms in place to oversee dealers and advisors in activities that are not directly involving the trading of securities.

“Advice is an important component of what we’re interested in,” he said. “Securities regulators at least have a structure that perhaps could fill a role.”

Erez Blumberger, deputy director of compliance and registrant regulation at the Ontario Securities Commission, agreed that the structure exists.

“We do have a platform, through the securities commissions, to impose terms and commissions or to suspend dealers and advisors to the extent that their conduct doesn’t arise to the standards set by the securities regulators,” he said.

But he said it would be challenging for securities commissions to try and regulate separately the trading of securities that many financial planners engage in from their pure financial planning activities, which don’t involve securities trading.

“The real challenge in my view is not so much whether you’re able to regulate yourselves as a profession,” he said, “it’s really the intersection of yet another layer of regulation, and how those varying layers of regulation will work.”