Overview
The Portfolio Management Association of Canada (PMAC) is pleased to have the opportunity to comment on the consultation with respect to the regulation of financial planners and financial advisors issued by the Financial and Consumer Affairs Authority of Saskatchewan (the Authority).
PMAC represents over 270 investment management firms registered to do business in Canada as portfolio managers. Collectively, PMAC’s members manage over $2.7 trillion in assets for private individuals, foundations, universities and pension plans.
PMAC is pleased that the Authority is taking steps that could result in elevated, harmonized standards for financial planners across Canada by considering whether Saskatchewan should leverage Ontario’s Financial Professionals Title Protection Act, 2019 (the Ontario Act). We are supportive of legislation aimed at regulating financial planners and the use of the title “financial planner” or a title that could reasonably be confused with that title, without the corresponding professional qualifications (Title Regulation). PMAC sees an opportunity for Title Regulation to help create a level playing field for those providing financial planning services while elevating the standards required of individuals holding themselves out as financial planners, for the benefit of investors. We also believe that Title Regulation, when coupled with appropriate regulatory oversight, investor education and outreach, can provide investors with greater certainty about the qualifications of the person providing them with financial planning and address investor confusion.
PMAC believes that the regulations under the Ontario Act – which we understand are still being drafted – will be critical to understanding the specific approach, impact, and benefit of Title Regulation in Ontario. Until the regulations under the Ontario Act have been published for stakeholder feedback, PMAC’s comments regarding Title Regulation are at this point, by necessity, limited to the high-level framework for Title Regulation outlined in the Ontario Act.
As set out further below, we recommend that the Authority leverage the Ontario Act as the basis for its own Title Regulation while going a step further to add the registration of credentialled individuals with a governing body in the province as well as to create a public database of registrants. PMAC believes that these two additional components will strengthen the oversight and impact of Title Regulation for the benefit of investors.
Background regarding PMAC’s position
Registered portfolio managers have discretionary authority over investments they manage for their clients and have a duty to act in the best interests of their clients, also referred to as a “fiduciary duty”.
Under provincial securities regulation, individuals working as portfolio managers are registered as either “advising representatives” or “associate advising representatives” and must meet specific proficiency requirements in order to be registered with members of the Canadian Securities Administrators (CSA). These are the highest education and experience levels in the investment industry; typically, a Chartered Financial Analyst (CFA) designation plus a set period of relevant experience. They are also subject to stringent oversight by securities regulators as well as oversight by a professional standard setting body, the CFA Institute. Advising representatives are highly trained professionals, working in a highly regulated industry. We note that some advising representatives may also have their Certified Financial Planner (CFP) designation. In some portfolio management firms, financial planning services are offered, and the firm may hire individuals with a CFP designation, or with an accounting or legal designation, to provide this additional service to clients.
We believe that efforts to professionalize financial planning and to institute sound credentialing and enforcement processes are positive.
PMAC was engaged in the consultative process on this topic in Ontario and made submissions on the 2016 consultation on Financial Advisory and Financial Planning Policy Alternatives, in respect of the Final Report issued by the Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives, and on the consultation paper on the regulation of financial planners issued by the Ontario Ministry of Finance in 2018 (links to each of these submissions can be found in the text above).
We refer you to PMAC’s April 2018 response to the Ontario Ministry of Finance (the PMAC 2018 Letter, linked here), for a more fulsome discussion of our position and recommendations with respect to the regulation of titles. We will not repeat the content of PMAC’s previous submissions here, but instead will:
- highlight our key recommendations from the PMAC 2018 Letter;
- explain the questions and concerns we have about the Ontario Act as we await the publication of draft regulations; and,
- respond to the Authority’s question regarding whether Saskatchewan should adopt the approach taken by Ontario.