Stepping It Up

1. Stepping It Up …the future of financial planning, and other stories CIFPs Conference - June 11, 2007

2. Today’s Agenda • Tenets of a Profession • FPSC’s role • Where are we today? • The challenges • What’s FPSC doing about it? • The Competency Profile in Detail • Where to from here? CIFPs Conference - June 11, 2007

3. A Profession? • Is financial planning a profession? • Why or why not? CIFPs Conference - June 11, 2007

4. Tenets of a Profession • Requires high level of education • High standards of conduct • Generally accepted standards of practice • Clearly defined, unique set of knowledge, skills and abilities with high standards of achievement CIFPs Conference - June 11, 2007

5. More Tenets • Commitment to continuous learning • Prime purpose of rendering a public service – public accountability • Standards based on concerted opinion and force of organization CIFPs Conference - June 11, 2007

6. A Profession in the MakingFPSC’s Mission • Benefit the public by leading the evolution of financial planning through the development, enforcement and promotion of the highest competency and ethical standards in financial planning as defined by CFP professionals CIFPs Conference - June 11, 2007

7. A Profession in the MakingFPSC’s Purpose • Build and continuously define the financial planning profession through CFP certification, ensuring that it is a viable, sustainable and rewarding profession that serves the public interest CIFPs Conference - June 11, 2007

8. Stepping it UpThe Result • Through our work (and the work of the professional community) we build trust in the profession and the CFP practitioner community • This in turn paves the way for CFP professionals to succeed CIFPs Conference - June 11, 2007

9. A Profession in the MakingThe Result • Recent survey in the U.S. of CFP professionals listed obtaining CFP certification as number three success factor. • First two factors spoke to subsidiaries of CFP certification – communications and trust CIFPs Conference - June 11, 2007

10. FPSC’s VisionFor FPSC • The standards-setter for the profession • Influential promoter of public interest • Influential advocate for the profession • Unique in our clearly defined role as the professional regulatory authority for FP • Influential promoter of the value of FP and of CFP certification • The organization that leads the way to a strong and respected profession represented by CFP professionals CIFPs Conference - June 11, 2007

11. Professional RecognitionJoint Responsibility Whose responsibility is it? • FPSC • Your professional association • Yourselves We all have to do our part CIFPs Conference - June 11, 2007

12. Tenets of a ProfessionThe Gaps • Cannot be seen as a marketing tool • Must be recognized as serving public good • Must have uniformity and consistency of service • Must be perceived distinct value to public CIFPs Conference - June 11, 2007

13. A Profession?The facts - The Good News • 2006 independent survey of CFP professionals tells us: • CFP is most important pursuit • CFP validates skills • CFP improves knowledge • CFP gives competitive advantage CIFPs Conference - June 11, 2007

14. A Profession?Facts – More Good News • Consumer survey tells us: • One in three adult Canadians know the CFP • CFP has the highest unaided awareness of all FS designations • High levels of consumer satisfaction • Associated with positive attributes • “Cares about me” • “is accessible” • “is in tune with my needs” CIFPs Conference - June 11, 2007

15. A Profession?The Less Good News • Consumer Perceptions • Very strong association with “salesperson” • Weak association with important characteristics of a profession • Consistent • Thorough • Unbiased • Professional CIFPs Conference - June 11, 2007

16. A Profession?More Not-so-Good News • 25% of YOUR CLIENTS don’t know that you hold the CFP! • 50% of those who do know don’t know what it means CIFPs Conference - June 11, 2007

17. Financial Planning? • Poor understanding of what financial planning represents, and its public value • Case in point… CIFPs Conference - June 11, 2007

18. Where are We Today?The Good • 17,000 strong community • High standards of entry • Exceptionally high retention rate • Growing awareness of financial planning and of CFP as the profession’s standard • No credible alternative professional credential CIFPs Conference - June 11, 2007

19. Where are We Today?More Not-so-Good • Still limited provision of comprehensive financial planning among the FP community – is this serving the public? • Very few consumers pay directly • Most Canadians don’t have a financial plan • Those that claim to have one didn’t use a financial planner to design it! CIFPs Conference - June 11, 2007

20. The Gaps –Who’s Going to Fix Them? • FPSC’s responsibilities • CFP professionals’ responsibilities CIFPs Conference - June 11, 2007

21. FPSC’s Role Revisited • Establish appropriate requirements for entry to the profession consistent (“inputs”) • Rigorous Examination • Appropriate experience requirements • Appropriate, relevant education CIFPs Conference - June 11, 2007

22. FPSC’s Role • Establish and oversee standards that CFP professionals must meet (“outputs”) • Standards of Practice • Standards of Ethical Conduct • Standards of Competent Performance CIFPs Conference - June 11, 2007

23. The Work AheadFPSC’s Ongoing Mandate • Enforce all standards • Require and enforce relevant CPD • Continue to define the profession, but through you • Promote the value proposition CIFPs Conference - June 11, 2007

24. The OutputsStandards for CFP Professionals • Ethical conduct • Practice • Competent performance CIFPs Conference - June 11, 2007

25. Standards for the ProfessionEthical Conduct • Defined by Code of Ethics • Well established • Well defined • Well adhered to • Rigorous systems in place to enforce CIFPs Conference - June 11, 2007

26. Standards for the ProfessionStandards of Practice • Practice Standards • Well established? • Well adhered to? • Rigorous systems in place to enforce? CIFPs Conference - June 11, 2007

27. Practice StandardsWhy are They So Important? • Clarify expectations between planner and client • Better-informed public • Enhanced confidence in the profession • Establish consistency and uniformity • Guidance for CFP professionals CIFPs Conference - June 11, 2007

28. Practice StandardsReaction of the CFP Community • Generally embraced – recognition of benefits to the profession • Some see this as merely another “compliance” measure • If we are going to be recognized as a profession, we need to overcome this attitude CIFPs Conference - June 11, 2007

29. Practice StandardsImplementation Issues • Greatest concern from practitioners regarding Standard 100 • How do I write an Engagement Letter? • What should it look like? • I need further guidance • “We already have enough compliance burden” CIFPs Conference - June 11, 2007

30. Practice StandardsFPSC’s response • FPSC guide to implementation of Standard 100 developed • Seven scenarios • Suggested phrases • Direct link: http://cfp-ca.org/pdf/FPSC-Resource-for-Practice-Standard-100.pdf CIFPs Conference - June 11, 2007

31. Practice StandardsOngoing Implementation Challenges • CFP professionals not fully aware of obligations • Public not fully aware of expectations • Not all organizations fully aligned with planners • Oversight challenges CIFPs Conference - June 11, 2007

32. Practice StandardsOvercoming Challenges • Use all resources available to you • Work with your organization • Share ideas with your peers – get involved in your association and join or create a chapter • FPSC will assist through ongoing guidance, employer visits, etc. • Understand the intent, scope and rationale for the Practice Standards • Ask yourself – am I meeting my personal obligations establishing the financial planning profession? CIFPs Conference - June 11, 2007

33. Standards of CompetenceThe Missing Piece • While Practice Standards further define the process, they don’t address what exactly a financial planner should be able to do • Previous approaches to certification were based primarily on knowledge – what must a CFP professional “know” CIFPs Conference - June 11, 2007

34. Knowledge SyllabusGaps • Students: “Why do I have to know that” • CFPs: “Getting the designation did not demonstrate my ability to perform financial planning.” • Employers: “We hire a CFP, who knows a lot, but we still have to teach them how to be a planner.” • The Public: “I don’t really understand exactly what a CFP professional can do for me.” • Internationally: “A CFP in Canada doesn’t mean the same as a CFP in Hong Kong/Australia/Japan” CIFPs Conference - June 11, 2007

35. Competency AnalysisFPSC’s Competency Profile • Principles • Content built and validated by practising CFP professionals • Future-focused • Designed to help drive the profession • Should be “job neutral” • Should be “knowledge-independent” CIFPs Conference - June 11, 2007

36. Competency ProfileDefining the Profession • The Challenge • Establish a cross-sectoral task force of 50 experts from across the country • Charge them with creating a one-page document that defines the profession CIFPs Conference - June 11, 2007

37. Competency ProfileDefining the Profession • Likely Result • A one page document that defines the profession, signed by the chair • A 49 page appendix made up of 49 separate one-page dissenting opinions CIFPs Conference - June 11, 2007

38. Competency ProfileDefining the Profession • Next step – if we can get over that hurdle • Define the profession worldwide • No small task! CIFPs Conference - June 11, 2007

39. Competency ProfileGood News! • We Did It! CIFPs Conference - June 11, 2007

40. Competency AnalysisPremise – CFP Professionals Defined • Provide wide range of financial strategies • Unique breadth of competencies • Wide breadth of knowledge • Work across multiple domains • Unique ability to identify and analyze inter-relationships among objectives – “integration” across multiple domains CIFPs Conference - June 11, 2007

41. Competency AnalysisDistinction between CFP and Specialists • Specialists can provide expert advice within their areas of expertise • Only CFP professionals can identify and create appropriate strategies across all domains to match the client’s situation, circumstances and values CIFPs Conference - June 11, 2007

42. Competency AnalysisFundamental Premise • Competencies built on definition of financial planning: • “Process of creating strategies to help clients manage their financial affairs to meet life goals” • The profile applies to the practice of financial planning – not product sales and not specialization. CIFPs Conference - June 11, 2007

43. FPSC’s Competency AnalysisWhy the big deal? • Focus in FS industry shifting from “sales” to “advice” • While CFP leads the way, potential competitors still risk threatening CFP’s authority • After 15 or more years, no clearly-defined profile currently exists for professional financial planners • Provides pre-emptive measure to ensure ISO is complementary, rather than a threat, to the CFP • Provides regulators with clear distinction between CFP competencies and those of other financial advisors • Can fit neatly into any regulatory or political agenda • Can pave the way to professional self-regulation CIFPs Conference - June 11, 2007

44. Competency-Based ApproachMore than knowledge, More than proficiency • “Competencies provide a description of the abilities that a CFP professional must possess and represent not just the tasks, but also incorporate the job-related skills, knowledge, attitudes and judgements required by members of the profession.” CIFPs Conference - June 11, 2007

45. CompetenceMore than just knowledge • A competent professional must demonstrate the inherent characteristics of a professional, not just knowledge and skill • Knowledge, abilities and professional skills all contribute to competence CIFPs Conference - June 11, 2007

46. Competency AnalysisProfile Overview • Key to CFP professionals’ uniqueness is that competencies must be drawn upon concurrently, even across multiple domains • CFP professionals must be able to wade through the confusion and develop appropriate strategies • These are the truly distinguishing ability of a financial planning professional CIFPs Conference - June 11, 2007

47. Competency AnalysisProfile Overview – Core Domains Competencies broken down as follows: • Three broad functions: • Collection • Analysis • Synthesis • Six components: • Financial Management • Asset Management • Risk Management • Tax Planning • Retirement Planning • Estate Planning CIFPs Conference - June 11, 2007

48. Competency AnalysisProfile Overview – Three additional elements • Fundamental financial planning practices • “Competencies that cut across all financial planning components, or that supersede the components and speak directly to that part of financial planning that cannot be broken down.” • Professional skills • “Skills that speak to acting as a professional with clients and colleagues, and to the financial planner’s responsibility to the profession of financial planning.” • Underlying knowledge CIFPs Conference - June 11, 2007

49. Competency AnalysisProfile Overview - Knowledge • Knowledge elements were identified only after establishment of competencies. • 11 Knowledge domains established CIFPs Conference - June 11, 2007

50. Competency AnalysisInternational Applicability • Competency profile developed to be transferable from country to country • Core competencies are separated from knowledge • Competencies should be consistent from country to country CIFPs Conference - June 11, 2007