Transforming the Financial Planning Industry into an Evidence-based, Fiduciary Profession
It’s one thing to build up your own practice. But as we approach the end of the year, we’re taking a step back to look at what it takes to build an entire profession. Today’s guest is here to show us what the financial planning industry can become at its best.
Jason Pereira is a Senior Financial Consultant with Woodgate Financial Inc and IPC Securities Corp. He is one of Canada’s most respected authorities on financial planning, the financial industry, and financial technology. He’s been awarded 7 industry designations including the CFA, CFP, and RFP. He has won and been named a finalist for several industry awards, and he is the only 3-time winner of the PlanPlus Global Financial Planning Awards.
Jason is also the leader of a growing group of financial advisors seeking to improve financial planning, both for advisors and consumers. As the president of the newly launched Financial Planning Association of Canada (FPAC), he’s here to talk about his hopes for the future of financial planning in this country.
What You’ll Learn in This Episode:
- Why FPAC exists and what its goals are (2:40)
- Why FPAC needed to be a new organization in order to reach its goals (10:30)
- How FPAC will benefit the public (15:30)
- How FPAC plans on handling enforcement (17:05)
- The benefits of FPAC membership to advisors (21:40)
- What types of memberships are available (27:05)
- What the reception for FPAC has been like in the industry (29:45)
Links and Resources:
Financial Planning Association of Canada
Quotes by Jason Pereira:
“This is a coming together of like-minded individuals who want to see the professionalization of planning in Canada, and to basically move this industry and this country forward.”
“We’re trying to create the member body that basically is going to push for active change.”
“We’re not going to be able to build the industry up if we don’t provide the resources to do that.”
You might remember Jason from an earlier episode of the show (and if you didn’t, do take the time to hear his advice for competing – and winning – in the Canadian HNW segment). However, today’s show is a little different as we’ll be hearing from Jason about his passion project of transforming financial planning from a sales-based industry to a robust profession in Canada.
Below, we’re sharing three key ideas from this episode:
- Why FPAC exists (2:40)
- The goals of the Financial Planning Association of Canada
- The benefits of FPAC membership to advisors (21:40)
For the rest of the episode, find the podcast on iTunes or Stitcher, or hit the link above.
Why FPAC exists
Jason and others started FPAC out of frustration with the status quo of financial planning in Canada. He was seeing that worldwide, among established and even many developing markets, Canada is far behind in terms of its financial planning infrastructure.
While there are many planners who want to see the landscape improve, there hasn’t been a committed yet accessible members’ association that can use the strength of numbers to push for real change.
As Jason puts it, “this is a coming together of like-minded individuals who want to see the professionalization of planning in Canada, and to basically move this industry and this country forward.” This means pushing for regulatory, technology, tax and legal changes to build out an ecosystem supportive of a strong financial planning profession.
The goals of the Financial Planning Association of Canada
Looking at other countries and different industries, Jason and others outlined an end state for what the industry should look like. They broke that ideal down into three main goals.
Fiduciary-level planning
This is the cornerstone of professionalization. Most consumers just assume that financial planners have a legal obligation to act in their best interest – but that’s not the case. There are certainly organizations that ask or require their members to act in clients’ best interests, but the legal weight doesn’t back the requirement up.
To be a member of FPAC, you must pledge from the first day that you will act as a fiduciary. FPAC is also calling for a legal fiduciary standard for anyone calling themselves a financial planner.
Higher professional standards
Speaking of which, right now in most provinces anyone can call themselves a financial planner – the term doesn’t really mean anything. The result is that the level of service and competence can vary wildly.
FPAC wants the term financial planner to mean something. They also want there to be no question that anyone carrying a CFP or RFP can provide sound financial planning.
Evidence-based financial planning
Too many advisors operate on unproven heuristics, assumptions, and rules of thumb. FPAC wants advisors to operate based on evidence.
Are you recommending an investment portfolio? Make sure you have a solid risk tolerance questionnaire to back it up. If you’re advising on insurance, you have to have a solid needs analysis, and so on.
The benefits of FPAC membership to advisors
On the surface, belonging to FPAC might sound like signing up to follow a lot of rules. But Jason is committed to building up the resources planners need to help them reach the required standards. “We’re not going to be able to build the industry up if we don’t provide the resources to do that,” he explains.
While they’ve only just launched the association, they will be rolling out major initiatives to help planners improve their practices.
Best practices wiki
FPAC is creating a wiki of best practices that will act as a guide on how to run your practice from start to finish. While anyone can edit it, there will also be curators to help create definitive guidelines and suggestions and ensure the content doesn’t become outdated.
Planning portal
Jason sees this as a hybrid between an academic journal and a concept library. It will include how-tos on everything planning-related, all backed by evidence and research. For example, if you’re executing an individual pension plan, there will be a definitive article on what that is, where it fits into a financial plan, how to implement it, who to go to and what tools you can use.
You can think of it as a one-stop repository for how to actually plan for your clients.
A large online forum
They will also create an online forum for members to participate in. This will work to build a community of members who can help one another raise the bar for financial planning in Canada.
Opportunities to give back
Jason has been hearing from colleagues across the country for years that there’s not a great structure for financial planners to offer financial planning services pro bono. As a result, they want to build a pro bono community to connect financial planners with communities that most need their help.
Trust
Jason’s vision is that as consumers start to learn about FPAC, they will demand its standards of their own financial planners. Consumers want to be able to trust their financial professionals, and they will seek out those who are demonstratively working for them.
If you want to learn more about FPAC, be sure to listen to the full episode and check out the FPAC charter. And come back in two weeks for more great financial planning advice from experts like Jason.
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