FAQ: Financial Planning Industry
How did the financial services industry in Canada develop to where it is today?
Historically, there were distinct divisions in the
services offered by the various industry players. You saved
your money or got a loan from a bank. You purchased stocks
and bonds from a broker. You bought insurance from an insurance
agent. And you bought mutual funds from a mutual funds sale
rep. But the traditional "4 pillars" of the financial
services industry have blurred. Players from every sector
are pushing into one another's turf. And what we are seeing
is the one-stop shop - a convergence so to speak, where most
of your financial services and products can be obtained through
most financial institutions.
How did the profession
of financial planning develop out of this convergence?
Financial planning as a distinct profession began to take
shape in the late 1970s. While giving financial advice was
not a new thing, it had become synonymous with the sale of
products. As the general public began to show a lack of faith
in public pension funds and baby boomers got older and had
more disposable income, financial planning type advice was
increasingly sought. Boomers began to ask financial planning
type questions of their "product" advisors - questions
few "advisors" were capable of answering. The traditional
pillars dictated the services provided were done piecemeal.
Financial planning, using all financial factors like insurance,
retirement planning, estate planning, education planning,
to name a few, was not available.
What is the current state
of the financial planning profession?
At present, there are between 50,000 and 60,000 individuals
in Canada who offer financial advice and/or sell financial
products. Of these, nearlr 17,000 are CFP professionals and more
than 14,000 are currently working toward CFP certification.
It has been estimated that 80 per cent of those who hold themselves
out as financial planners hold the CFP credential. The profession
is still relatively young and market saturation has yet to
occur. The results of our Quality of Work-Life Survey show
that more than one-third of planners are over the age of 50
so there is, and will be, room for more financial planners.
How do I become a financial
planner?
The ability to call yourself a financial planner varies from
province to province as financial services regulation is under
the jurisdiction of provincial governments. Currently, the
only two provinces with any regulation about who can call
themselves financial planners are Quebec and British Columbia.
But an initiative of the CSA (Canadian Securities Administrators),
under the direction of the OSC, is attempting to implement
a homogeneous minimum professional requirement for individuals
working in all provinces.
Why become a financial
planner?
In the recent Quality of Work-Life survey, CFP professionals cited
a number of reasons for becoming a financial planner. These
include: the independent and flexible nature of the position,
the desire to work in an industry where it's possible to help
people and have a positive effect on their lives, an interest
in investing and finance and the opportunity for a potentially
substantial income.
Can you sum up life as
a financial planner?
According to our Quality of Work-Life survey, financial planners
love their jobs. For the most part, they feel they are well
compensated for the work they do, feel financially secure,
on top of their career goals and are content with the amount
of autonomy and flexibility they have in their work. And 81 per
cent of respondents said that if given the chance, they would
choose to become financial planners all over again.
How do I attain CFP
certification?
CFP candidates must complete an accredited
education program, complete the FPSC administered Certified
Financial Planner (CFP) Examination and meet a work experience
requirement. When applying for certification, candidates must
disclose past or pending litigation proceedings, commit to
abide by the Code of Ethics and acknowledge the right of Financial
Planners Standards Council (FPSC) to enforce its Code of Ethics
as described in its Disciplinary Rules and Procedures. Approximately
3,000 candidates write the CFP Examination yearly. Historically,
the pass rate of this exam is in the 60 per cent range.
Is there a minimum education
requirement prior to taking courses in an accredited program?
The bare minimum requirement is Grade 12, but depending on
where you take the program, other prerequisites may apply.
You would have to check with the specific registered education
provider for more details. According to our CFP
Stats, more than 70 per cent of CFP professionals hold post-secondary
degrees and diplomas. The highest incidence of post-secondary
education was among the younger planners.
Why should I get CFP certification?
CFP professionals represent the largest body of professional planners
in this country. The standards CFP professionals meet each year
set the financial planning bar at a level that leads the national
development of the profession. By taking the next step and
obtaining the credential, you show your clients your commitment
to the financial planning profession. And the CFP designation
is internationally recognized. There are currently more than 100,000 CFP professionals in 19 countries worldwide.
Once I have CFP certification,
what do I have to do to keep it?
CFP professionals must renew their licence on a yearly basis.
When renewing, they must attest to 30 hours of continuing
education and agree to abide by the FPSC Code of Ethics. Each
year, a percentage of CFP professionals are audited and must provide
proof of their continuing education.
What happens if I fail
to comply with the Code of Ethics?
All complaints must be reported in writing and are investigated
by FPSC's Director, Ethics, Legal & Regulatory Affairs. If the Director
determines the complaint has merit, it will be investigated
further and a charge will be laid if necessary. If found guilty,
the most severe penalty would be permanent revocation of the
CFP licence.
How are financial planners
paid?
Depending on the company and industry sector, your compensation
can consist of salary, bonus, commission and fee, or any combination
thereof. Our Quality of Work-Life Survey illustrates the percentage
breakdown.
How much can I expect
to earn as a financial planner?
Compensation is in part related to the sector in which planners
work and how long they have been in business. Generally, the
longer planners have been in business, the more clients with
high net worths they serve and the more they earn. But, our
Quality of Work-Life survey indicated that 31 per cent of
planners under the age of 35 earned in excess of $100,000.
Where do financial planners
work?
Every sector of the financial services industry employs individuals
who are qualified to provide financial planning to clients.
More and more, employers are looking specifically for those
professionals who have taken the next step and earned the
CFP credential. They are also instituting policies that encourage
existing employees, through bonuses, paid courses and paid examination
fees, to earn CFP certification. It should also be noted that
planners can wear many hats and will not always be acting
as financial planners. The level of service must be discussed
with the client prior to the engagement.
Will I have to work in
an urban area?
Geographically speaking, CFP professionals work in all areas of
Canada. Most do work in urban areas though with the concentration
being in Southern Ontario.
How busy will my work-life
be?
According to our Quality of Work-Life survey, 61 per cent
of planners work more than 40 hours per week. Those working
in the suburbs and rural areas work longer hours, as do those
with higher incomes and wealthier clients. Younger planners
tend to work shorter hours than their older counterparts,
but take less vacation time. More than 50 per cent of those
surveyed take between 3 and 6 weeks of vacation.
How many clients can I
expect to have?
Over half the planners surveyed serve more
than 200 clients. Those with the most experience served the
most clients.
|
are certification marks