This article appears in the May 2023 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Insurance advisors receive extensive ethics training when they complete the Life Licence Qualification Program (LLQP), but it’s a one-time course in compliance and regulation. Whether an agent gets updated ethics training depends on both their province and whether they voluntarily join an association.
The LLQP course is full of regulation and compliance material and serves as a guide to the rules that might apply in a given situation, said Jason Watt, vice-president of Business Career College in Edmonton. But restricting the requirement to just one multiple-choice exam squanders an opportunity to conduct one-on-one evaluations of prospective agents, which may be useful assessments of candidates’ ethics, he said.
“I’ve always looked at the LLQP as a door opener,” said Don Plettell, chartered life underwriter (CLU) and president and owner of Lethbridge, Alta.-based Plettell Financial & Estate Planning Ltd.
The licence allows someone to sell life insurance, but Plettell said advisors should do more after receiving it. A life insurance advisor could be required to belong to an industry association, for example, that provides ongoing ethics training.
Someone with little or no relevant experience can become qualified to sell life insurance for about $1,000, the price of the LLQP course, without additional qualifications such as the CLU, Watt said. That compares to $1,620 for a version of the Canadian Securities Course, which is one way of becoming a mutual fund dealer. Completing the LLQP takes about 100 hours, according to the Financial Services Regulatory Authority of Ontario.
The Canadian Insurance Services Regulatory Organizations’ LLQP curriculum has two ethics and professional practice modules: one for Quebec and one for the rest of Canada. Topics include conflicts of interest, unfair and deceptive practices, trafficking in insurance, powers of attorney, divorce, estates, duty of good faith, and rules on claims and payment of benefits, among many more.
“It’s very extensive, especially if you are getting licensed for Quebec,” said John Waldron, founder of Learnedly Canada Inc., referring to the Civil Code version of the ethics module required for Quebec, which is longer than the common-law version.
The Institute for Advanced Financial Education (IAFE), a subsidiary of Advocis, has a separate training package on ethics for the CLU. The IAFE ethics training is no more advanced than that offered by the LLQP, said Barbara Riddell, vice-president of learning and development with Advocis, but it is “more explicit” in meeting the minimum education requirements for Ontario’s financial planner title.
Advocis has a series of continuing education (CE) classes called Making Choices, which are generic to financial services professionals, including financial planners and securities and mutual fund reps, as well as insurance advisors, Riddell said. A student can participate in a discussion on the choice an advisor should make in a given scenario (such as the advisor’s responsibilities while using social media), and then a facilitator would provide guidance from codes of conduct of organizations, such as FP Canada.
FP Canada has standards of professional responsibility, such as placing the client’s interests first, maintaining the necessary skills and knowledge to provide advice and services, disclosure of all relevant facts (including conflicts of interest) and keeping client information confidential.
Waldron does not recommend adding material to the LLQP ethics and professional practice modules, but does recommend a harmonized, national CE policy on ethics training.
“Many insurance agents are dual-licensed under [the former Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada]. Why not have a more unified or consistent framework for continuing education?” Waldron said.
Whether a life insurance advisor must undergo ethics training as part of CE depends on the province. In Ontario, for example, insurance reps must earn 30 CE credits every two years, but not a specific number of ethics hours or credits. In Saskatchewan, advisors must complete 15 CE hours a year, including three hours of ethics training every five years.
The Insurance Councils of Saskatchewan list several CE courses that qualify as ethics training, including ones offered by Advocis, FP Canada, the Canadian Securities Institute and various insurers.
Waldron believes advisors should revisit ethical issues periodically throughout their careers, and ongoing training is a good way to provide that mental exercise.
“If you think about your ethics as a muscle, you don’t just work it out once and then that’s it,” he said. “It’s something you have to maintain.”