On January 12, 2016, the Mutual Fund Dealers' Association ("MFDA") released a summary of comments received in response to a Consultation Paper circulated in September 2015 on the use and definition of the term "financial planner".
The Consultation Paper and comments are part of the MFDA's review of proposed rules to regulate the use of the term "financial planner" by individuals without appropriate proficiency. Currently, in most provinces, individuals can use the title financial planner without being required to meet any minimum proficiency standards. There are several distinct designations used by individuals engaged in financial planning; however, each is governed by a different organization causing potential confusion to investors attempting to compare and understand these designations. This has been a concern of investor advocates and industry associations.
MFDA Rule 1.2.1(d) prescribes requirements for the use of business titles, including certifications and designations used by MFDA Approved Persons who present themselves as financial planners. This Rule prohibits the use of a business title that could reasonably be expected to deceive or mislead a client with respect to the proficiency or qualifications of the Approved Person. The MFDA is considering amendments to this Rule that would establish minimum proficiency requirements for Approved Persons using the title "financial planner".
The Consultation Paper identifies four commonly used financial planning designations, each issued by a different organization: Certified Financial Planner ("CFP"), Financial Planner, Personal Financial Planner, and Registered Financial Planner. It sought input with respect to whether these designations would meet the MFDA's proposed proficiency requirements and, further, requests input on other designations that might be appropriate for an individual seeking to use the title "financial planner".
A total of 29 submissions were received in response to the request for comments. The comments came from MFDA Members, Approved Persons, education service providers, and investor of industry associations. The majority of comments expressed general support for the effort to provide investors with greater clarity regarding the role and expertise of "financial planners".
The four commonly used designations listed above were approved by the majority of commenters as being appropriate for the purpose of meeting the MFDA's proposed proficiency requirements. Commenters identified the reasons for the designations being appropriate, which included: a focus on comprehensive planning, educational and examination requirements, continuing education requirements and related work experience, an applicable code of ethics, and identifiable practice standards. In particular, the CFP designation was approved as it requires two standardized national examinations, a minimum of three years relevant work experience, and ongoing continuing education.
In response to what other existing designations might be appropriate for financial planners, commenters suggested Chartered Life Underwriter, Chartered Financial Consultant, Certified International Wealth Manager, and Certified Financial Analyst ("CFA").
MFDA staff will now consider the comments received and develop proposed amendments to Rule 1.2.1(d). The proposed amendments will then be available for public comment.