Stromberg's account of FPSC is Report's Achilles Heel

(FPSC President Don Johnston's response to Glorianne Stromberg's report: Investment funds in Canada and Consumer Protection - Strategies for the Millennium, prepared for Office of Consumer Affairs, Industry Canada. It was requested by and published in Advisor's Edge magazine, February 1999)

From our perspective, Glorianne Stromberg's account of the Financial Planners Standards Council (FPSC) and the CFP designation is her report's Achilles Heel. My greatest personal disappointment is that she did not consult me to get her facts straight.

Of course, there is much in the report the FPSC fully supports. We not only share her desire for a profession that provides consistent, ethical and competent financial planning advice to the Canadian public - it is precisely why the FPSC exists. But as I said to Ms. Stromberg in my letter to her, and which I copied to regulators across the country, the report's account of why the FPSC was formed, what it is, what it does and how it does it is largely erroneous.

Ms. Stromberg's reported assumptions and conclusions about the FPSC are often misguided, misleading and naïve. But, more important to why we must set the record straight, is that her inferences and criticisms of the FPSC and the CFP designation have the potential to work against our mutual goal of one standard and one designation for all those holding themselves out as financial planners in Canada. Should these criticisms mislead the public and undermine the current efforts of the FPSC and Canadian Securities Administrators to come up with the best means to uniformly serve the interests of the financial services consumer across the country, it is Canadians who will lose.

Had Ms. Stromberg spoken with me, she would have discovered that the "Non Partisan Standards Council" called for in her report, reflects in large part what the FPSC is currently and almost precisely that into which we are fast becoming. We have a decidedly made-in-Canada curriculum designed by representatives of all the key sectors of the industry that continues in its evolution to consistently reflect the understanding that financial planning is a "relationship-based" process separate and distinct from the sale of product.

The American CFP curriculum model that she criticises in her report as being transaction-based, in fact, undergoes continual evaluation and change according to needs-based research, and therefore reflects the shift in the financial services industry from one that had been transaction-based to one that is advisory in nature. While we looked to this model to provide a starting point from which to create standards sensitive to the needs of the Canadian public, it was only one of five sources we consulted. Our standards never have been nor ever will be fixed. What the FPSC does as a standard-setting and certifying body continually evolves apace with the needs of the consumer. And it does so with the expert guidance of individuals and organisations with substantial, relevant and current experience in providing a broad variety of financial services to the Canadian public and who are, to use Ms. Stromberg's words, "respected industry educators".

The two years of rigorous scrutiny and diligent evaluation the FPSC curriculum and professional proficiency examination has undergone is the reality that illuminates the naiveté of Stromberg's supposition that it is a "relatively simple task" to ensure that people emerging from education programs do so with the necessary set of professional skills. There is nothing simple about it. It requires experience in the arduous exercises of curriculum development and evaluation, and in the setting of examinations that reflect practical and relevant standards. And it requires experience in researching just what it is financial planners do in the field. We know, because we've been doing it.

Our current curriculum has never had the "transaction-based" focus Stromberg suggests is so pervasive in existing courses. Courses teaching the CFP curriculum cover the following main topic areas: Code of Ethics; Fundamentals of financial planning; Insurance planning; Investment planning; Income tax planning; Retirement and employee benefits planning; and Estate planning. Such topics reflect our recognition of financial planning as an advisory-based process, not a transaction-based one.

Now, how FPSC transformed from being the not-for-profit industry solution to an industry problem to a potential "commercial" monopoly in Ms. Stromberg's view is a complete mystery to me. If her assessment of us has to do with her conception of the international CFP trademark agreement we entered into in 1995, then once again it is ill conceived and dangerously misleading.

FPSC, after careful consideration, chose to use the CFP certification model from which to develop its standards because it incorporated the 4E's essential to the development of a profession: they are education, examination, experience and ethics. In the absence of uniform government regulation of financial planners in many countries, including Canada, the CFP credential assures the public that financial planners who are certified have voluntarily agreed to adhere to high standards of competence and ethical practice established by each organizational member of the International CFP Council.

I think Ms. Stromberg and FPSC can both agree that it is one set of standards represented by one designation that is in the best interests of the public. The outstanding question is whether a not-for-profit independent organization, a regulatory body, or a hybrid of both should be setting and maintaining these standards.

Ms. Stromberg in her report continually quotes unnamed critics of FPSC and the CFP designation. Had she bothered to consult me, she would have discovered that these critics are misinformed and harbour misconceptions about who we are and what we do. Had she found the time to solicit it, she might have deemed our side of the story to be just that - our side. That's fair. But then she could at least have included it. As it stands, the report only refers to an unidentified side of the story - the side of unnamed critics and unidentified purported experts that have unfortunately led to Ms. Stromberg's own misconceptions and consequent criticism of FPSC and the CFP designation.