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April 2022

Financial Planner and Advisor Titles

A New Framework is Announced

Howard Borlack
Howard Borlack,
Partner

Kritika Seth
Kritika Seth,
Articling Student

by Howard Borlack and Kritika Seth

Ontario's Finance Ministry has officially approved a new set of rules governing employees in the financial services industry who use the titles "financial planner" or "financial adviser". The implementation of these standards, which have been absent in the past, will offer security to investors from conducting business with individuals who are unqualified or under-qualified.

Background

"Financial planner" and "financial advisor" are terms that have been used loosely in Canada in the past. With the new legislation put forward by the Financial Services Regulatory Authority of Ontario (FSRA), this will no longer be the case. The FSRA announced that the Financial Professionals Title Protection Rule will come into force on March 28, 2022. This Rule governs the usage of the title "financial planner" and "financial advisor" by implementing strict standards required to qualify for these roles. Specifically, this rule will make certain qualifications and credentials mandatory for people who work in the industry and refer to themselves by either of these two titles.1

Primarily, it must be noted that financial advisors and financial planners have distinct and separate roles. While financial advisors help clients manage their investments, financial planners aid with strategic planning to save money for the future. This rule change will be phased in over time: financial planners will have a four-year transition period to comply with this new framework, while financial advisers will be given a two-year time frame.2 However, individuals who began using the titles after January 1, 2020, will need to get credentials from an FSRA-approved credentialing body immediately.

...there are currently approximately 100,000 financial advisers working across Canada.

This change in legislation comes at a crucial time, as currently, there are approximately 100,000 financial advisers working across Canada. In the absence of a concrete set of rules, anyone can refer to themselves as a financial professional, even without the proper certification, designation, or educational background to qualify for this role. This creates a situation of vulnerability for investors who put their trust in these professionals. The implementation of this legislation marks a win for consumers who expect and deserve clarity, confidence, and competence when seeking advice from financial professionals.

This change in legislation has been forthcoming for quite some time. In 2019, Ontario passed legislation that put into effect the Financial Professionals Title Protection Act, which provides an overview of the qualifications and credentials used in the financial services industry.

Several organizations have applied for authorization to certify individuals to use the new credentials. The certified financial planner designation and the Qualified Associate Financial Planner certification are amongst these organizations. It is anticipated that both these designations will be selected by the FSRA as approved credentials.3 The Financial Advisors Association of Canada, also known as Advocis, has also applied to become an FSRA- approved credentialing body.

The reason for the implementation of the Financial Professionals Title Protection Rule is to protect investors, who often depend entirely upon the judgement of financial professionals when making decisions regarding investing their funds. Another contributory factor that was considered when implementing this rule is that it would result in an increase in consistency among people across Canada who use the "financial professional" titles.4

Conclusion

Until now, the usage of the financial planner and financial advisor titles has been unregulated. This lack of oversight has resulted in confusion amongst investors. It has also caused skepticism pertaining to the expertise of those who provide financial services. With the announcement of the Financial Professionals Title Protection Rule, Ontario hopes to set a precedent amongst other provinces to spearhead similar title protection frameworks, leading to a cohesive strategy. The result of this legislative framework is increased professionalism in the industry and heightened trust placed into the hands of financial advisors and planners.


  1. Clare O'Hara. "Ontario approves new rules governing use of Financial Planner and adviser titles. The Globe and Mail" (2022, March 23).
  2. Ibid.
  3. Ibid.
  4. Ibid.

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