Your Host

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Your Host
Ann Bowman Vice President, FPSC
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Panelists
Don Johnston President, FPSC
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Panelists
Garry R. Duncan Chair, FPSC
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Panelists
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Panelists
Noel Maye CEO, Financial Planning Standards Board
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Panelists
Chairman, Canadian Institute of Financial
Planners
John Charrette
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Panelists
Donna MacCandish VP, CIBC, Imperial Service
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Panelists
Steve Howard President CEO, Advocis
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Panelists
Whipple Steinkraus Vice-President, Consumers
Council of Canada
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Panelists
Cary List Vice President, FPSC
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FPSC Mission and Purpose
FPSC MISSION
Financial Planners Standards Council benefits the
public by leading the evolution of the financial
planning profession in Canada through the
development, enforcement and promotion of the
highest competency and ethical standards in
financial planning, as identified by individuals
who have earned the CFP designation
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Where are we today?
EXISTING CFP STANDARDS

• 4Es
• Standards in Education (pre- and
  post-certification)
  
• Standards in Examination
• Standards in Experience
• Standards in Ethics

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Where are we today?
CODE OF ETHICS

• Identifies what is the expected behaviour of all
  CFP professionals in all aspects of work
  
• Not necessarily specific to the practice of
  financial planning, but mandatory for all CFP
  professionals

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Where are we today?
FINANCIAL PLANNING PROCESS

• Lays out what planners should do when performing
  financial planning

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Where are we today?
FINANCIAL PLANNING PROCESS AND CODE OF ETHICS

• Neither the Code of Ethics nor the financial
  planning process define how a CFP professionals
  ethical responsibilities come together and are
  applied to the financial planning process during
  a financial planning engagement
• What constitutes a financial planning engagement
  has not been clearly defined

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Where are we today?
FINANCIAL PLANNING AND ADVICE

• Until now, we have not had a clear and concise
  articulation to the public, the industry or CFP
  professionals of exactly what financial planning
  is and how it differs from financial advice or
  other forms of financial intermediation
• What constitutes a financial planning engagement
  has not been clearly defined

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Where are we today?
GETTING READY FOR THE NEXT STEP

• With Financial Planning Practice Standards
• With a clear and concise definition of Financial
  Planning

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Practice Standards
WHAT ARE THEY?

• Practice Standards bring together the financial
  planning process and the Code of Ethics
  
• They serve to clarify what financial planning is
  and what it is not
  
• They help to define how to perform the financial
  planning process in an ethical manner
  
• They serve to ensure consistency and uniformity
  of practice, while still leaving room for
  creativity and professional judgement
  
• They assist CFP professionals by providing
  guidance and clarity

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Practice Standards
TO WHOM DO THEY APPLY?

• Code of Ethics/Disciplinary Rules
• Apply to ALL CFP licensees in every aspect of
  their work, regardless of the specific job
  
• Practice Standards
• Apply to CFP licensees when engaged in the
  practice of financial planning

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Practice Standards
WHAT IS FINANCIAL PLANNING?

• How do we define financial planning?
• Financial Planning is the process of creating
  strategies, considering all relevant aspects of a
  clients financial situation, to manage ones
  financial affairs to meet life goals.

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Practice Standards
FINANCIAL PLANNING DEFINED

• Can be comprehensive
• Incorporates ALL aspect of ones financial needs
  and goals
  
• Includes all components of a comprehensive
  financial plan
  
• Personal Finance Management
• Investment Planning
• Tax Planning
• Risk Management
• Retirement Planning
• Estate Planning

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Practice Standards
FINANCIAL PLANNING DEFINED

• Can be modular or segmented
• Includes one or more, but not all, components of
  a comprehensive financial plan

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Practice Standards
FINANCIAL PLANNING DEFINED

• The financial planning test
• Are the creation of strategies involved
• Are all relevant aspects of the clients
  financial situation considered
  
• Is the objective to meet specific life goals?
• If all of these answers are yes, you are
  engaged in financial planning activity

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Practice Standards
APPLICABILITY

• Apply to both comprehensive and modular/segmented
  financial planning engagements
  
• Some professional judgement involved

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Practice Standards
WHY DO WE NEED THEM?

• Next logical giant step in the evolution of
  financial planning, moving from standards to a
  profession
  
• Fundamental to FPSCs mission to lead the
  evolution of the financial planning profession

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Practice Standards
WHY DO WE NEED THEM?

• Clarify expectations, both for CFP professionals
  and the public
  
• Result in better-informed public
• Raise confidence in CFP professionals

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Practice Standards
THE EMERGENCE OF A PROFESSION

• What Makes a Profession?
• Consistency of service
• Uniformity of service
• At its core, a primary purpose of serving the
  public good
  
• A profession cannot exist without standards of
  practice

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Practice Standards
DEVELOPMENT

• Development process began two years ago
• With the assistance of many CFP practitioners and
  other professionals, 10 draft standards were
  introduced in September 2002 for distribution

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Practice Standards
DEVELOPMENT

• Beginning in September 2002, FPSC ran focus
  groups across the country to solicit feedback
  from CFP professionals
  
• Feedback was analyzed and synthesized into a
  revised draft document in January 2003
  
• Through these activities, over 30 CFP
  professionals were involved in the creation of
  the revised draft

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Practice Standards
DEVELOPMENT

• Revised draft was posted on our web site for
  public and practitioner comment in January 2003
  
• Dozens of comments were received, primarily by
  email
  
• These comments were analyzed and synthesized into
  revised final draft for release today

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Practice Standards
DEVELOPMENT

• We are now asking the broader community to review
  these standards, work with them in practice and
  put them to the test
  
• Comments will be considered until October 31,
  2004
  
• Final standards will be released in January 2005
  with implementation mandatory by all CFP
  professionals, when providing financial planning
  services, effective April 1, 2005

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Practice Standards
GETTING READY

• A step-by-step walk through,
• one standard at a time

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Practice Standards
Standard 100

• Establish the Engagement
• Define the Terms of the Engagement
• The client and the CFP professional will define
  and agree on the scope of the financial planning
  engagement. Details about each partys
  responsibilities, the time frames of the
  engagement, compensation, and conflicts of
  interest will be set out in writing in an
  engagement letter signed by both parties

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Practice Standards
Standard 100 Interpretation

• Written letter of engagement is essential to
  ensure mutual understanding and agreement between
  the CFP professional and the client
  
• Engagement letter should include
• Assurance of confidentiality
• Statement on reasonableness of assumptions
• Parties to the engagement
• Financial Planning services to be provided
• Tenure and timeframes

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Practice Standards
Standard 100 Interpretation (cont.)

• Implementation and/or Review may not apply to
  certain engagements. In these circumstances,
  they must be explicitly excluded in the
  engagement letter.
• In these circumstances, Practice Standards 100
  through 400 will still apply.

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Practice Standards
Standard 100 Interpretation (cont.)

• Non-Financial-Planning Engagements
• If a CFP professional offers a non-financial-plann
  ing service that, in his or her professional
  judgement may be reasonably construed by the
  client to be a financial planning service, the
  CFP professional will make written disclosure to
  the client that he or she is not in that instance
  undertaking a financial planning engagement

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Practice Standards
Standard 200 (A)

• Gather Client Data
• Identify the Client's Goals, Needs and
  Priorities
  
• The CFP professional will discuss the clients
  financial goals, needs and priorities with them
  before making and/or implementing any advice or
  recommendations

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Practice Standards
Standard 200 (A) Interpretation

• The CFP professional cannot create appropriate
  strategies without clearly understanding the
  clients goals, needs or priorities
  
• The CFP professional has an obligation to assist
  the client in clarifying and prioritizing his/her
  goals

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Practice Standards
Standard 200 (B)

• Gather Client Data
• Obtain the Clients Quantitative Data and
  Documents
  
• The CFP professional will gather all data
  relevant to the clients current financial
  situation. Sufficient, relevant information and
  documentation will be obtained from the client
  before any advice or recommendations are made
  and/or implemented

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Practice Standards
Standard 200 (B) Interpretation

• The impact of the CFP professionals inability to
  obtain necessary information must be disclosed
  to, and discussed with, the client

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Practice Standards
Standard 300

• Clarify the Clients Current Financial Position
  and Identify any Problems and/or Opportunities
  
• Analyze and Evaluate the Information with Respect
  to the Client's Goals, Needs and Priorities
  
• The CFP professional will analyze all data to
  determine the client's current financial
  situation, and evaluate to what extent the
  client's goals, needs and priorities can be met
  under the current circumstances.

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Practice Standards
Standard 300 Interpretation

• Such analysis may lead to the necessity to review
  goals, needs and priorities with the client

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Practice Standards
Standard 400(A)

• Develop and Present the Financial Plan
• Identify and Evaluate the Financial Planning
  Strategies
  
• The CFP professional will identify and evaluate
  financial planning strategies to achieve the
  client's stated goals, needs and priorities

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Practice Standards
Standard 400(A) Interpretation

• Possible strategies should be evaluated for
  appropriateness and effectiveness in achieving
  the clients goals
  
• Assumptions used in the analysis and creation of
  strategies must be reasonable and realistic, and
  disclosed to the client in writing
  

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Practice Standards
Standard 400(B)

• Develop and Present the Financial Plan
• Develop and Present the Financial Planning
  Recommendations
  
• The CFP professional will develop recommendations
  to achieve the client's stated goals, needs and
  priorities, and will present these
  recommendations so that the client understands

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Practice Standards
Standard 400(B) Interpretation

• Recommendations made arising out of alternative
  strategies must be practical and in the best
  interest of the client
  
• The financial planning recommendations should be
  in the form of a written report which should
  include all relevant data and assumptions
  supporting the recommendations

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Practice Standards
Standard 500(A)

• Implementation of the Financial Plan
• Agree on Implementation Action, Responsibilities
  and Time Frames
  
• The client and the CFP professional will agree on
  implementation action, responsibilities, and time
  frames

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Practice Standards
Standard 500(A) Interpretation

• If it forms part of the engagement,
  implementation action should be mutually agreed
  upon by the CFP professional and the client
  
• This agreement should include
• Actions to be taken
• Who is responsible for the actions
• Agreement as to timelines for completion

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Practice Standards
Standard 500(B)

• Implementation of the Financial Plan
• Implement the Financial Plan
• The client and the CFP professional will take
  action to implement the approved recommendations

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Practice Standards
Standard 500(B) Interpretation

• While the sale of products by the CFP
  professional falls outside of normal financial
  planning activities, recommendations are often
  implemented directly by the CFP professional
  through the sale of product
• This standard deals specifically with the
  offering of products or services for sale related
  to the implementation of a financial plan

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Practice Standards
Standard 500(B) Interpretation (Cont.)

• The CFP professional will provide, sell and/or
  promote a product or service only to the extent
  that he/she is qualified and licensed to do so
  and only to the extent that it is in the best
  interest of the client

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Practice Standards
Standard 600(A)

• Review the Financial Plan
• Agree on Responsibilities and Time Frame for
  Review and Re-Evaluation of the Financial Plan
  
• The client and the CFP professional will agree on
  a time frame for monitoring and evaluating the
  financial plan

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Practice Standards
Standard 600(A) Interpretation

• Unless specifically excluded from the engagement,
  the CFP professional will contact the client to
  schedule a review of the financial plan
  
• Such review should normally occur not less than
  annually, but in any case should be consistent
  with the review schedule set out in the
  engagement letter, if applicable

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Practice Standards
Standard 600(B)

• Review the Financial Plan
• Monitor and Evaluate the Financial Plan
• The client and the CFP professional will review
  the financial plan to assess its progress, to
  determine if it is still appropriate and to
  confirm any revisions mutually considered
  necessary

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From Standards to a Profession

• Were on our way
• But its a never ending journey
• So, get ready for more

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New Competency Profile

• Currently working on redefining the job
  knowledge, skills, abilities and attitudes
  required of CFP professionals
  
• Will lead to
• New competency profile
• New examination blueprint
• New education requirements
• Stay tuned...

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Practice Standards

• As we move
• from standards
• to a Profession

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Panelists