Resistance has been the common theme from industry players in their response to the proposed title reform legislation that is working its way through the new Financial Services Authority of Ontario (FSRA) regulator. This important regulation to ensure that only financial professionals with appropriate credentials be able to call themselves “financial planners” or “financial advisors” will ensure that consumers are better served and protected.
If this self-centred push is successful, it will only benefit the least-qualified providers of financial services and be another setback for professionalization and transparency in the investment industry. Currently, financial professional’s titles (outside of Quebec) are meaningless and do nothing to inform consumers of financial services as to what the financial professional they deal with actually does. Possibly, these titles could mislead consumers into expecting a level of service and credibility that may be completely unwarranted.
Some of the industry submissions received are arguing that the rules are planning to set the bar too high and would exclude people who are using either title now from continuing to do so without achieving further designations or credentials. As well, the MFDA and IIROC organizations who are having their submission provided by the Investment Association of Canada (IIAC) who is arguing that any financial professional regulated by these two bodies should be exempt from any further educational requirements. The main issue with these arguments, is that most of the education provided to the financial services industry is focused around the licensing to sell products. However, financial planning and advice are not solely focused on products and in fact may result in no product sales at all. Financial planners and financial advisors synthesize information to make well-educated, informed recommendations; product selection and sales are only a small portion of the total value proposition provided.
Keeping the status quo, will simply be validating that the financial services industry is sufficient to meet consumers needs in today’s increasing complex economic environment. It could be argued that it would prove that this entire exercise was failed from the beginning due to regulatory capture by the industry.
Many people already are wary of financial services, and their ability to meet their specific needs and goals. Helping title reform fail will simply provide one more reason for people (especially Millennials and Gen Z) to move away from traditional financial provides altogether.