MFDA stirs up pot of alphabet soup

par Andrew Rickard | January 14 2016 11:29AM

The Mutual Fund Dealers Association (MFDA) is preparing to regulate who may call themselves "financial planners", and a number of industry designations are under consideration.

In September, the MFDA published a consultation paper on standards that would prohibit mutual fund salespeople from calling themselves financial planners unless they hold appropriate qualifications. Regulators said they were concerned by the fact that advisors in most of Canada can call themselves financial planners without having obtained any qualifications at all, and that investors might be misled about their actual abilities.

The MFDA received a total of 29 submissions on the subject from fund dealers, advisors, education service providers, and industry associations. For the most part, the regulators say respondents were in favour of providing investors with greater clarity regarding the role and level of expertise of those who use the financial planner title.

But what should be deemed appropriate qualifications for a financial planner? The submissions proposed a veritable alphabet soup of designations.

"The majority of commenters expressed support for the [Certified Financial Planner] CFP designation," says the MFDA. However, submissions also recommended the Registered Financial Planner (RFP), Professional Financial Planner (PFP), and Quebec's Financial Planner (F. Pl.) designations. The Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified International Wealth Manager (CIWM), and Chartered Financial Analyst (CFA) qualifications were suggested as well.

In addition, the consultation document asked about including a grandfathering clause that would allow someone who lacks formal qualifications but who has been competently practicing financial planning for a significant period of time to still use the financial planner title. The MFDA says that "a few" commenters expressed support for a grandfathering provision, but that others were against the idea.

"In support of this view, commenters generally noted that such a provision would defeat the purpose of requiring that one achieve a certain level of proficiency and experience before being able to use the title ‘financial planner’. In addition, it was noted that the MFDA is not proposing to require that an individual achieve a financial planning designation in order to continue in their licensed activities,” reads the regulator’s summary. “Rather, as proposed, new MFDA requirements in this area would only restrict Approved Persons from using the title ‘financial planner’. As a result, it was noted that not including a grandfathering provision in Rule 1.2.1(d) would not be particularly onerous."

The MFDA says its staff will consider the submissions while they develop the proposed amendment, which will be published for public comment at a later date.

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