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CAIFA and CAFP merger plans revealed

By Martin Beaudry | April 20 2002 06:50PM

The Canadian Association of Financial Planners (CAFP) led to a merger proposal between CAIFA and the CAFP. If accepted by the membership of the two organizations, the new name for the association will be the Canadian Association of Financial Planners and Advisors (CAFPA).

Both CAIFA and the CAFP members will formally vote on the merger September 28. The resolution will ask for the formation of the CAFPA to be effective January 1, 2003. The CAFP membership stands at about 3200, and there are about 600 common to both associations. CAIFA therefore expects a growth of between 2500 and 2600 new members.

Since the announcement, comments have begun pouring in to various discussion sites on the Internet. Among the most dominant issues discussed to date are those of the name itself and the focus of the new organization. Some members have expressed concerns that CAIFA was moving away from its historically strong insurance image and adopting instead the guise of a financial planning association.

A merger plan has now been drawn up despite being once criticized by the CAFP on the basis that CAIFA standards were inferior and its code of ethics inadequate.

CAFPA will have two groups of voting members: Planners and Advisors. Each entails different requirements. All CAFP members and CAIFA members with Chartered Life Underwriter (CLU) designations will automatically become CAFPA Planners. CAIFA members will become CAFPA Advisors. Those that hold Certified Financial Planner (CFP) designations will be invited to pass a “Practice Assessment” to become Planners. Full details are listed in a discussion paper on CAIFA’s website at www.caifa.com.

Brian Mallard, Treasurer at CAIFA, says the merger will create a single and thereby stronger voice. Under the mandate of the CAPFA, the CLU designation will be recognized as the pre-eminent designation for insurance sales, he says.

The CFP will be the accepted designation for financial planners, explains Mr. Mallard. Planners wishing to achieve the CLU designation will be asked to take three courses beyond the CFP as a part of the revamped program, he says.

All CAFPA Advisors must be authorized to use the CFP, the Pl. Fin., or CLU designations within seven years of joining CAFPA. Both Planners and Advisors will have to acquire 30 hours of continuing education annually, adhere to a set code of ethics, and have E&O coverage.

The CAFP already has an E&O sponsored plan through broker Hallmark Insurance Brokers and insurer Encon. Cheryl Bauer-Hyde, Chair at CAFP, said she isn’t sure what will happen with the two sponsored plans and whether they will be allowed to remain or be changed. She felt that the new organization, the CAFPA, would likely go back to the market and ask for bids, but noted that the issue has not yet been discussed.

An issue that arose during the first merger attempt was the future of the Registered Financial Planner (RFP) designation. While a merger would lay heavy emphasis on the CFP and CLU designations, RFP’s would essentially be laid aside.

Seven hundred members of the CAFP have the RFP designation. They already experienced worries last year when the Financial Planners Standards Council (FPSC), the Canadian licensor of the CFP, passed a resolution ruling that its member associations could not promote designations other than the CFP.

Now, the CAFP is going through formal processes to officially cut the RFP designation free, says Ms. Bauer-Hyde. A core group of people with that designation have already begun planning to create an organization for RFP designates.

Lynne Triffon, Vice-President at TE Financial, is one out of this group planning the separate RFP organization. She says some of the RFP members have expressed regret that the great deal of work to be part of the CAFP would now be wasted. They are upset because they would rather have stayed with the CAFP.

Ms. Triffon doesn’t see the CFP designation as being in competition with that of the RFP. She says the two meet different needs. While the CFP focuses on acquired knowledge alone, the RFP focuses on its application as well.

The organization has been tentatively named the Institute of Advanced Financial Planning. Ms. Bauer-Hyde said the organization would build on the rigour and higher standards demanded for an RFP designation.

FPSC opposed

In addition, the FPSC announced that it neither endorses nor supports the association merger as it is outlined. Don Johnston, President at the FPSC, said some of the initiatives would conflict with FPSC’s mission to enhance the value of the CFP designation. Some 14,000 planners hold the designation in Canada.

“If its purpose is to act as a standard-setting body with the purpose of branding a new definition of a financial planning professional, it will simply add to confusion in the marketplace and industry, and we can neither endorse nor support it,” said Mr. Johnston.

He says the idea of “adding another layer of codes and exams, in order to create the illusion that CFP planners who don’t join the new organization are in some way second-class, is contrary to our efforts to reduce the number of titles, designations and terms used to distinguish those who are qualified to offer professional financial planning advice.”

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