The life underwriters Association of Canada first opened its doors one warm spring day in June 1906. Through 100 years, two name changes and a contentious merger, the organization has ridden occasional controversy but ultimately proven itself to be a survivor in the constantly changing financial services arena.

Originally an insurance industry association, a name change in the late 1990s to the Canadian Association of Insurance and Financial Advisors marked the shift among members toward offering investment products and financial advice along with insurance. In 2002 came its merger with the Canadian Association of Financial Planners and another name change. It became Advocis, the Financial Advisor Association of Canada, to emphasize its mandate of advocacy on behalf of members.

Today, as it celebrates its 100th anniversary, the association faces a number of challenges, many of which have dogged financial services for a number of years. A fractured industry — with separate regulatory models for insurance and investment products, and a long list of regulatory bodies — makes it difficult for a single organization to represent consistently the interests of all financial advisors.

“I think, clearly, the biggest thing the organization has had to deal with in the past several years has been the change in the financial services industry and the need to realign the organization to serve the needs of people in the industry,” says Gary McLeod, chairman of Advocis and executive vice president of PPI Financial Group in Toronto.

Industry trends are having a direct effect on Advocis’s membership rolls. Gone are the days when life insurers employed large staffs of captive salespeople who were required by their employers to join the association, many of them paying dues directly through payroll deductions.

“In the new world, that doesn’t happen any more, and that did have an impact on our membership. The number of people who were involved with our organization declined for a period of time,” McLeod says. Membership has been a concern in recent years, particularly since the 2002 merger with the CAFP, which was said at the time to create an organization boasting 18,000 members.

In 2004, Advocis reported its membership had dropped to 15,000, the lowest level since the merger. Last year, it was down to 12,000, but neither McLeod nor Advocis president and CEO Steve Howard seems worried. Shifts in the industry toward more independent practitioners, company consolidation and demutualization have made maintaining membership a challenge. Still, Howard admits, a number of former CAFP members decided to depart rather than remain in the merged organization.

“There were some people in the CAFP who didn’t really understand what CAIFA was, who went off and formed their own associations,” Howard says, referring to groups formed by former CAFP members.

The 471-member Institute of Advanced Financial Planners, based in Vancouver, was formed by a group of planners who wanted to retain the registered financial planner designation. In 2003, the Canadian Institute of Financial Planners was spun out of the Investment Funds Institute of Canada’s education arm by a group wanting to protect the certified financial planner designation. The 3,500-member Independent Financial Brokers of Canada, which was started more than 20 years ago, also competes with Advocis for members.

McLeod doesn’t regard the smaller associations as competition for Advocis. “There are other groups that might do some of what we do in providing services to advisors,” he says. “But only one organization is able to do all of the things that advisors need, and that’s Advocis.”

He points to advocacy, education services, code of conduct and disciplinary procedures, local chapters across the country and an errors and omissions insurance program for members as Advocis’s “complete package.”

In fact, Advocis claims membership has risen recently to 13,000, and Howard attributes the gain to Advocis’s marketing. “We’ve made it clear that our value proposition is advocacy and professionalism,” he says, noting a sales and marketing force has been instituted and volunteers and staff members are involved as well.

Advocis has a target membership of 20,000 to 25,000 over the next five years. “That number is based on the number of licensees in the industry that we think are available to come to us as potential members,” Howard says.

One of Advocis’s selling points is its new E&O insurance program. The plan is operated by an arm’s-length, non-profit body called the Advocis Protection Association. Howard says it was essential that advisors have a professional liability insurance plan that covers all the areas in which they practise.

@page_break@A challenge in establishing the plan was to create one that is impervious to the uncertainties of the property and casualty insurance market. Essentially, the plan sets aside premiums to cover risks, and reinsures some of that risk. The issue of E&O touches on what Advocis says is the main obstacle of the industry: its fractured and inconsistent regulatory structure.

On the Investment Dealers Association of Canada/Mutual Fund Dealers Association side, professional liability insurance is handled by the advisor’s firm, so advisors who work for investment and mutual fund dealers don’t need individual E&O insurance coverage. A consumer who has a complaint against an advisor concerning a transaction deals with the firm, not the individual advisor. But insurance advisors are required by provincial insurance councils (in Ontario, the Financial Services Commission of Ontario) to carry individual professional liability insurance.

“With that fracturing, which is entirely inconsistent for most practitioners who carry more than one licence and, therefore, operate in both paradigms, it was essential that we provide not only a solution but we show that the solution is the right solution for the industry as a whole,” Howard says. “It complements our regulatory strategy, which is based on the individual advisors holding out to the consumer directly their qualifications and their accountability.”

The main issue that Advocis has been advocating over the years is regulatory consistency across the financial pillars. “The major issue facing advisors today is competing, confusing and complex regulatory models,” Howard says. “The advisor having to have his or her feet in two or three regulatory models, depending on which licences are held, is an impractical element. Unlike most Canadian problems, this isn’t a regional problem; this is a fragmentation across bodies of practice. IDA, MFDA, FPSC, OSC, FSCO, and so on — the very fact that I can name five or eight acronyms that affect the lives of advisors, each of which seems to have a vested interest in its own continuation, is the problem.”

As for Advocis’s own continuation, it is shaping up to be a challenging second century. IE