Changes to the way financial planners become certified will soon see a new cohort of these professionals emerge aimed at serving a broader population of Canadians with less complex financial needs.
FP Canada, the organization that oversees the Certified Financial Planner designation, will next year introduce the Qualified Associate Financial Planner (QAFP) certification as part of changes to the CFP program.
There are approximately 100,000 financial advisers in Canada, who typically help clients manage their investments. But only about 16,500 of them hold a CFP, according to FP Canada. A CFP allows advisers to go beyond investments to include advice on planning for such goals as retirement or a child’s education.
The introduction of the QAFP certification may see some of the advisers adding a planning component to their business that could help serve Canadians who are not high net worth and have less than $1-million in investable assets.
“We saw this as an opportunity for more advisers to move into the financial-planning space to really benefit the average Canadian who may not have the same complexity of tax and estate issues,” said Cary List, chief executive of FP Canada, in an interview.
“There is still a very large cohort of advisers today in Canada that do not have a financial planning designation," added Greg Pollock, CEO of Advocis, a lobby group for financial advisers in Canada. “Changes, such as the QAFP, is going to fulfill a purpose for those advisers who may want to ease into financial planning."
In 2022, it will become mandatory for those looking to acquire a CFP to hold a postsecondary degree from an accredited college or university, while the QAFP will need to have a postsecondary diploma.
The changes to the 22-year-old designation come at the same time the Ontario government has been looking to put stricter enforcement on the use of the titles “financial planner” or “financial adviser” when individuals lack qualifications. Earlier this year, the province passed legislation that requires anyone in Ontario who wants to use those titles to obtain appropriate credentials and remain in good standing.
Currently, to earn a CFP, candidates are required to earn FPSC Level 1 certification as a mandatory step. At the start of 2020, the FPSC Level 1 certification will be replaced by QAFP and will no longer be a mandatory step toward obtaining the CFP.
But for some investment dealers, the stand-alone QAFP may not be seen as a gold standard but more of a starting point to completing a higher level of certification.
IG Wealth Management has one of the largest group of planners in the country with 2,600 advisers. In 2017, the firm made the CFP designation mandatory for all its advisers.
While the introduction of the QAFP allows an adviser to acquire a designation in less than a year, compared with the three years it would take to achieve a CFP, it will not change the current requirements at the firm, says Brent Allen, senior vice-president at IG Wealth.
“The QAFP proves you are serious about becoming a professional and provides great foundation for comprehensive planning,” Mr. Allen said. “Once completed, an adviser can go on and obtain the full CFP and I believe that is the route we will take as more information comes out.”
“Being certified and accredited is a differentiator for a planner and we want to hold ourselves out in the industry as being the most educated ones out there.”
Shannon Sabey, president of Belay Wealth Inc. and a certified financial planner in Southern Alberta, strongly supports the addition of higher-education requirements but says there needs to be more detailed information about the new QAFP designation for Canadians to understand what type of advice they will receive.
“What does ‘less complex financial needs’ really mean?” she says.
“If you are looking at a Canadian family, money impacts that family from birth to the grave and everything in between. I have not yet come across a non-complex Canadian family because they are all meeting different challenges and all require money help in some context."
Royal Bank of Canada is supportive of the QAFP designation, says Michael Walker, head of mutual funds distribution and RBC Financial Planning, but will “encourage” advisers to pursue continuing professional development toward the CFP designation.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.