"It's Regulated, Right?" - Research Reveals Canadians in the Dark Regarding Qualifications, Ethical Obligations of Financial Planners and Advisors
Feb 21, 2012, 09:00 ET
FPSC Calls on Canadians to Hire Smart with Better "Hiring Literacy"
TORONTO, Feb. 21, 2012 /CNW/ - Financial Planning Standards Council (FPSC®) is urging Canadians to improve their 'hiring literacy' when engaging financial planners. This is a time when Canadians could greatly benefit from competent and ethical advice and guidance for their financial affairs.
Unfortunately, many Canadians operate on blind trust when choosing whom to engage for this assistance. According to new research conducted by The Strategic Counsel on behalf of FPSC, far too many Canadians are misinformed about the required qualifications and ethical obligations of their planners. For instance, an overwhelming majority (70%) of survey respondents falsely believe that individuals must be licensed in order to call themselves a financial planner.
As part of its campaign to encourage Canadians to hire smart, FPSC (the standards setting and enforcement body that oversees CFP® certification) is sharing this research to debunk some of the myths Canadians hold regarding financial advice.
"With the exception of Quebec, anyone in any province can call themselves a financial planner without meeting any minimum qualifications or standards," says Cary List, President & CEO, FPSC.
"We strongly encourage Canadians to seek advice for their financial planning needs, but also to make sure they hire smart. Poor 'hiring literacy' can put Canadians at risk of engaging individuals who may not be appropriately qualified to meet their needs; individuals who may deliberately or inadvertently misrepresent their qualifications as well as their ethical and professional commitments" adds List.
MYTH: "All financial advisors are accountable to an oversight body which ensures they provide ethical and competent service to their clients." More than half (54%) of respondents falsely believe this statement to be true. Nearly one third (29%) are 'not sure' and fewer than 1 in 5 (17%) respondents disagreed with this statement.
FACT: Financial advice is largely unregulated in Canada. To sell products, advisors must have appropriate licenses; however, when it comes to financial planning advice, there is no government enforced standard or mandatory professional oversight for competent, ethical and professional behavior. Current regulation is piece-meal and is product based (i.e. stocks, mutual funds, insurance). Only individuals who have voluntarily stepped up to earn a professional credential such as the CFP designation are held accountable to a professional oversight body with standards for ethical and competent financial planning advice and service.
MYTH: "Individuals must be licensed to call themselves financial planners. There are strict regulations in all provinces regarding who can refer to themselves as financial planners". 70% believe individuals must be licensed to call themselves "financial planner". And 42% of Canadians believe there are strict regulations in all provinces regarding who can refer to themselves as financial planners.
FACT: With the exception of Quebec, anyone in Canada can call themselves a financial planner without meeting any requirements for competence or ethics. Credentials that ensure high standards for competence and ethical behavior such as the CFP designation are strictly voluntary.
Individuals who earn the CFP credential must meet rigorous standards of professional responsibility and demonstrate competence through rigorous standardized national examinations before earning the CFP credential. After earning the designation, CFP professionals must commit to continuing education, professional standards of ethics and competent performance and are held accountable to FPSC's professional oversight.
HIRE SMART: "Canadians put themselves in the driver's seat when they hire smart. There are many professionals who offer highly competent and ethical service, always putting their clients first. But in absence of common national standards that require all financial planners to meet professional qualifications and be accountable to oversight, Canadians must protect themselves by ensuring they're hiring appropriate qualified and credentialed professionals. It's critical they ask the right questions of their potential planner, and know what the red flags are," says List.
In encouraging Canadians to learn more about what to look for in a financial planner and what to expect from a professional, ethical engagement, FPSC offers the 10 Tips for Choosing a Planner, Questions to Ask A Planner and other resources at www.fpsc.ca. Additionally, the Standards of Professional Responsibility provides a guide for consumers of what to expect from a CFP professional.
*ABOUT THE RESEARCH: The Strategic Counsel conducted a survey among an online panel of English Canadians (outside Quebec) over the age of 18 who have used some financial planning services offered by financial advisors, and those who have not used financial planning services from financial advisors. The survey was conducted between September 11th, 2011 and September 30th 2011. This panel has been established to measure the value of financial planning over a five-year period. These survey results are based on the responses of 1,079 respondents.
FPSC Executives Available to Discuss:
In absence of regulation, how can Canadians equip themselves with the know-how and 'hiring' literacy when engaging planners? What should they look for, ask about, check into?
What are some of the professional and ethical obligations expected of a CFP professional?
About Financial Planning Standards Council
Financial Planning Standards Council (FPSC®) is a not-for-profit organization which develops, promotes and enforces professional standards in financial planning through Certified Financial Planner® certification, and raises Canadians' awareness of the importance of financial planning. FPSC's vision is to see Canadians improve their lives by engaging in financial planning. Currently, there are more than 17,500 CFP professionals in Canada and more than 140,000 CFP certificants in 24 countries worldwide. See www.fpsc.ca for more information.
CFP®, Certified Financial Planner® and CFP (with flame logo)® are trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. Financial Planning Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB. FPSC, FPSC and logo and Financial Planning Standards Council are trademarks of Financial Planning Standards Council
©2012 Financial Planning Standards Council. All rights reserved.
For further information:
and to arrange interviews please contact:
Chadnick Communications (for FPSC)
416.631.7437 or [email protected]
416.593.8587 x 235 or [email protected]
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