FPStandard SPRING 2016

ISSUE 13

I D E A S T H O U G H T S A N D T R E N D S I N T H E F I N A N C I A L P L A N N I N G P R O F E S S I O N

P 1

FPSC.CA

On My Mind: In Whose Interest

Is it Anyway?

P 2

Seven Tips for Building Trust by

Training Your Memory

P 8

Why Good Clients Ignore Great Advice

P 12

Predicting a Person’s Likelihood to Seek

Professional Financial Help: Financial Stress and Self-Efficacy

902-375 University Avenue Toronto, Ontario M5G 2J5

Telephone: 416.593.8587

Toll-Free: 1.800.305.9886

Email: inform@fpsc.ca

Website: fpsc.ca

Consumer Site: FinancialPlanningforCanadians.ca

Twitter: @FPSC_Canada

Facebook: FPSC.Canada

LinkedIn: company/Financial-Planning-Standards-Council

YouTube: FinancialPlanningStandardsCouncil

Google+: FinancialPlanningStandardsCouncil

CFP®, Certified finanCial Planner® and are certification trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planning Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB. All other ® are registered trademarks of FPSC, unless indicated. © 2016 Financial Planning Standards Council. All rights reserved.

A RECENT GLOBAL STUDY BY THE INTERNATIONAL FINANCIAL PLANNING STANDARDS BOARD, IN CONJUNCTION WITH FPSC IN CANADA, REVEALED THAT CANADIANS DO NOT HAVE CONFIDENCE THAT THEY WILL ACHIEVE THEIR FINANCIAL LIFE GOALS AND DO NOT FEEL STRONGLY ABOUT THEIR FINANCIAL KNOWLEDGE. WHILE THEY ALMOST UNANIMOUSLY AGREE THAT TRUSTWORTHINESS IS THE MOST IMPORTANT CONSIDERATION WHEN CHOOSING THEIR FINANCIAL PLANNER, TWO THIRDS DON’T KNOW WHOM TO TRUST.

93

66

68

4 in 5

%

%

% SAY THAT TRUSTWORTHINESS IS THE MOST IMPORTANT CONSIDERATION WHEN IT COMES TO CHOOSING A FINANCIAL PLANNER.

DON’T KNOW WHOM TO TRUST WHEN IT COMES TO THEIR FINANCES.

For more findings from the research, including the benefits of financial planning and of working with a CFP professional, visit FinancialPlanningforCanadians.ca.

*The study was conducted in June and July 2015, and involved more than 19,000 adults in 19 countries, including over 1,000 in Canada.

DO NOT HAVE STRONG CONFIDENCE THAT THEY WILL ACHIEVE THEIR FINANCIAL LIFE GOALS.

WORRY A LOT ABOUT THEIR FINANCIAL SITUATION.

BY THE NUMBERS

TRUST IS THE #1 ISSUE PREVENTING CANADIANS FROM SEEKING THE FINANCIAL PLANNING HELP THEY NEED*

SPRING 2016 – 1

ON MY MIND

IN WHOSE INTEREST IS IT ANYWAY?

The term “public interest” seems to be thrown around very loosely when it relates to issues of consumer protection. It’s used by many to justify a wide range of actions and proposals. It’s also sometimes used as smokescreen for a position that is actually in the advocate’s interest first; I’ve seen it used to describe a small sector or special interest group projecting its own values on the entire population and I’ve seen it used without context of what the public truly wants or needs.

So, how can one be sure that when a specific policy proposal is brought forth, it is genuinely crafted and negotiated in the public interest – that is, for the greater good?

To answer this question, one might consider a number of smell tests:

• What are the expertise and motives of the advocates?

• Do they have the requisite understanding of the issues and/or the moral authority to make a sound public interest proposal?

• If the proposal is coming from an organization, what is that organization’s true purpose and mandate?

• Is the advocate in a direct conflict of interest with the consumer’s best interest?

• What research supports the proposal? Is it unbiased and credible from a public perspective?

As a non-profit organization, Financial Planning Standards Council has the public interest at its core. It’s in our mandate. Our belief is that the public interest, the interest of industry and the interest of CFP® professionals themselves can align, and in fact in the vast majority of cases they do. However, we know that if an issue is not in the public’s best interest, it can’t be in our interest.

We listen through social media to garner the consumer perspective; we engage CFP professionals to better understand the issues

their clients are facing; and we conduct and commission research to test our assumptions and ensure that our positions are founded on fact.

Recently we partnered with FPSB (the international body whose member organizations grant the CFP credential worldwide) on a study1 that supports the notion that the concerns Canadians have regarding their current and future financial health are pretty much universal across the globe. The research findings revealed that fewer than 18% of Canadians feel strongly that they are knowledgeable about financial matters. If we eliminate the 1.1 million Canadians that Statistics Canada reports work in the financial services industry, the percentage drops even further. As concerning, only a slightly higher percentage of our population (21%) are confident that they will achieve their financial life goals.

Let’s think about this, not from the perspective of failing our citizens, but rather from a standpoint of opportunity. Each percentage point increase represents the lives of 330,000 people in Canada; people, all possessing their own unique stories and circumstances, who desperately need the advice of a trusted professional if they are to have any confidence in securing their future lives.

Our research indicates that there is one primary issue getting in their way: trust. In fact, as in every other developed and developing nation, over 65% of Canadians don’t know whom to trust with their financial future. They are afraid of handing over their trust to individuals who may forfeit their financial futures for personal gain; they are confused about who is qualified to offer them sound financial planning advice; and in fact they don’t know exactly what help they actually need.

So, how can we deal with the matter of trust? We suggest the solution is a relatively simple one: codify in law the professional standards for certification, governance and oversight mechanisms that already exist in practice for the 22,000 financial planning professionals who have stepped

Cary List CA, CPA, CFP®

President & CEO, FPSC

Cary leads FPSC as the premier standards-setter for the financial planning profession in Canada. He has spent most of the past decade working to ensure that CFP certification is recognized as the standard that Canadians can expect and rely upon from financial planners and to see financial planning recognized in law as a distinct profession.

up to professional certification, but that are currently voluntary, and make these standards a requirement for all who wish to claim financial planning as their own.

In doing so we offer Canadians a number of assurances. They would know:

• that the person they are trusting to help them with their financial future has the requisite knowledge, skills and abilities to provide competent, quality financial planning advice; and

• that the person they have engaged – and disclosed their most personal information to – is bound by a professional code of ethics that ensures that their interests come first.

On page 5 in this issue of the FP Standard we discuss the draft policy recommendations the Ontario Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives has put forward. Among them, it has recognized the need for the introduction of a unified set of financial planning standards, including a standard that ensures clients’ interests come before all others. FPSC will continue to advocate for language that would see the adoption of the Canadian Financial Planning Definitions, Standards & Competencies (that we developed and released in partnership with IQPF) as the threshold for those who are permitted to call themselves Financial Planners in Ontario.

Trust is a primary factor standing in our way from securing the financial futures of Canadians; let’s fix that. Simply and effectively.

1 FPSB Ltd.'s global research is based on input from over 19,000 consumers surveyed online by GfK during June and July 2015, in 19 territories, including over 1,000 in Canada.

SPRING 2016 – 2

BY BOB GRAYMEMORY EXPERT AND MOTIVATIONAL SPEAKER

SEVEN TIPS FOR BUILDING TRUST BY TRAINING YOUR MEMORY

Dale Carnegie said, “A person's name is the sweetest sound in the world to that person.”

Business is built on credibility and relationships. If your product or service is good and your ethics are in alignment, your success then rests upon how you make clients feel.

People like to be recognized. When I see my financial planner, I want to know how I’m doing financially, but I don’t want to hear details about asset class diversification, bonds, dividends and the TSX. I want him to be competent, but outside of that I really want him to know me – to know that I’m more than just his 2:30 appointment. I want to know that if I see him in the supermarket he’ll remember something about me beyond my portfolio. That’s what earns my trust.

Research commissioned by FPSC and FPSB shows that trustworthiness is ranked the number one obstacle to seeking financial advice.

So what can you do to gain trust and build solid relationships?

You can make your clients or potential clients feel special by training and improving your memory.

I teach techniques on building relationships through association, imagery and review. As a financial planner with a trained memory, you’ll have a big advantage over planners with untrained memories.

The following seven tips will help you train your memory to remember names. Try them at your next networking event.

1. Ensure you hear the name. It helps if you repeat it back.

2. Spell the name in your head. This helps make it stick.

3. If it’s an unusual name, make a comment. Ask about its background or spelling.

4. Use the name a couple of times during your conversation, but don’t go overboard.

5. Use the name when leaving.

6. If you’ve ever said, “I have a terrible memory for names,” stop it now. Begin to tell yourself you have a great memory for names.

7. As soon as possible after meeting someone, enter the name into an app (I have recently developed one specifically for remembering clients) or a database.

No matter where you are in your career, your brain can create new connections and associations. With consistent practice, you can strengthen your memory just as you would strengthen your muscles with weights.

Imagine running into a client or potential client on your day off. Imagine quickly retrieving his or her name. Imagine how good you will make that person feel.

About Bob: For over 25 years, Bob Gray has amazed, entertained and educated audiences across six continents with his memory demonstrations, keynote presentations and sales-oriented self-improvement workshops. His abilities have netted him a place in the Guinness Book of World Records and TV appearances on Ripley’s Believe It Or Not, The Today Show on NBC and The Steve Harvey Show. Bob's techniques provide his audiences with keys to unlock memory potential to work more efficiently, effectively and profitably.

He is a Certified Speaking Professional, the highest earned designation in the speaking profession and in 2006 was inducted into the Canadian Speaking Hall of Fame. Bob was a guest speaker at the FPSC 2015 CFP Professional Symposium held during Financial Planning Week. Find him at memoryedge.com.

SPRING 2016 – 3

LOOK FOR THIS SYMBOL

For more information visit:fpsc.ca/approved-ce-credits

FPSC CE Approval Program Milestone: Now Offering Over 100 Education Providers

ASSESSED.

APPROVED.

ASSURED.

Academy of Financial Divorce Specialists

Advisor.ca

Advocis

Age-Friendly Business

Agenomics

AGF Investments Inc.

Akua Carmichael, Barrister & Solicitor

Aston Hill Asset Management Inc.

Bachrach & Associates, Inc.

BMO Financial Group

BMO Institute for Learning

Bridgehouse Asset Managers

Bruce Etherington & Associates

Business Career College Corp

Canadian Anti-Money Laundering Institute

Canadian ETF Association

Canadian Institute of Certified Executor Advisors

Canadian Institute of Financial Planners

Canadian Securities Institute

Candura Group, LLC

CE Network Inc.

CE-Credits.ca

CI Investments

CIBC Asset Management Inc

Clear Path Media

CLIFE Inc.

Concentra Trust

Covenant Group

Desjardins

Damian Borges

Dynamic Funds

ERAssure – Estate Risk Protection Plan Inc.

ES Computer Training

Ethics Audit

Fidelity Investments

First Canadian Title

Foran Financial Institute

Gordon B Lang and Associates Inc

Greater Durham Self-Defence

Great-West Life Assurance Company

Forstrong Global Asset Management Inc.

Financial Planning Standards Council

Harrison Pensa LLP

Heritage Institute Canada

IFSE Institute

ILS Learning Corporation

Independent Financial Brokers of Canada

Industrial Alliance Insurance and Financial Services

Ingle International Imagine Financial Ltd.

Insight Information

Institute for Divorce Financial Analysts

Institute of Advanced Financial Planners

INTEGRIS Pension Management Corp.

Invesco Canada Ltd.

Investors Group

Investment Management Consultants Association

Ivey Business School

Jarislowsky Fraser Limited

Knowledge Bureau

Knowledge First Financial

Learning Partner

Legacy Companies, LLC

Louis Jolicoeur

Mackenzie Investments

Manulife

McCague Borlack LLP

MD Management

MedAxio Insurance Medical Services

Mindpath Corp.

MNP LLP

National Bank of Canada

National Exempt Market Association

NPC Data Guard

Oliver's Learning

Pacific Business & Law Institute

Parley Consulting

Peak Conflict Solutions

Stock Trading Academy

Positive Strategies Inc.

Practical Management of Canada

Private Capital Markets Association of Canada

Queensbury Group

Radius Financial Education

RBC Royal Bank

Responsible Investment Association

SaskWorks Venture Fund Inc.

Schulich Executive Education Centre

Skillsoft Corporation

Smarten Up Institute

STEP Canada

Tabuchi Law Offices

TEN STAR Holdings Inc.

The Financial Facilitators Inc.

The Money Finder

TriDelta Investment Counsel

Trust Unlimited

Vancouver Dementia Care Consulting

Vision Systems Corp.

WeGuideU.com

Yorkville Asset Management

XTRAcredits

SPRING 2016 – 4

BY RUTH MACKENZIE PRESIDENT & CEO, CANADIAN ASSOCIATION OF GIFT PLANNERS

ADD VALUE WITH CONVERSATIONS ON PHILANTHROPY (AND BUILD YOUR BUSINESS AT THE SAME TIME)

Few would disagree that Canada’s charitable sector contributes in myriad ways to building the strong and resilient communities that makes this country the envy of many around the world. While our charities and nonprofits rely on the generosity of donors to provide the resources to do their ‘good works’, many of Canada’s high-net worth (HNW) individuals fall short in their charitable giving, donating less than 1% of investable assets to causes they care about. Financial planners and advisors can change that, and they can strengthen their business while doing so.

A recent study by the Canadian Association of Gift Planners (CAGP), The Philanthropic Conversation: Understanding the Financial Advisor Approach and High Net Worth Individual Perspective, explored the incidence and nature of conversations on philanthropy between financial advisors and their HNW clients and found that clients are highly interested in discussing philanthropy and look to their advisors to lead the way. Conversely, while the majority of advisors indicated they had conversations on charitable giving with their clients, the clients told a different story saying only a very few advisors raised the topic.

The conflicting perspective lies in the essence of those conversations whereby the clients felt discussions were only cursory, largely focusing on the tax advantages of charitable giving and not the exploratory, values-based conversations they were seeking. When the conversation focuses on values and core motivations, HNW clients reported

a great degree of satisfaction and indicated it helped build a stronger, deeper relationship with their advisor.

Advisors who integrate philanthropy as a core facet of their business report across the board that it’s been a game changer, resulting in enriched client relations, expanded business with their clients, extended business to their clients' families and networks, and ultimately increased assets under management.

For financial planners and advisors looking to develop their business, and in an era of transparency and fee disclosure, the benefits of enhancing expertise in the meaning and mechanics of philanthropic giving are tangible, providing a true value-add that will help strengthen your reputation and differentiate your practice.

With most citing that reducing tax paid is not the key motivation for charitable giving, but rather the desire to make an impact, change the world or passion for a cause, advisors would be well poised to shift gears and take the discussion to a deeper level.

At the same time, starting a conversation on charitable giving can be a challenge. As a follow up to The Philanthropic Conversation, CAGP produced a Guide for Professional Financial Advisors, a series of articles with tips, strategies and expert advice on an array of topics from the basics of creating a charitable plan, advice on how much a client should give, involving family in charitable planning as well as information on some key giving vehicles.

With the opportunity to better serve your clients and differentiate your practice while doing so, the business case for building philanthropy into your financial planning practice is strong. CAGP can provide the information and tools to do so.

CAGP is a national association that inspires and educates the people involved in strategic charitable gift planning. They advocate for a beneficial tax and legislative environment that strengthens philanthropic giving, and are the lead provider of education and professional development on strategic charitable giving in Canada. Their 1,200 members are made up of charity leaders and professional advisors who are leaders and experts on strategic philanthropy. For a copy of The Philanthropic Conversation or the Guide for Professional Financial Advisors, please visit cagp-acpdp.org.

SPRING 2016 – 5

BY STEPHEN ROTSTEIN, LL.B. FPSC VP, POLICY & REGULATORY AFFAIRS & GENERAL COUNSEL

ONTARIO GOVERNMENT’S EXPERT COMMITTEE RELEASES RECOMMENDATIONS ON REGULATING FINANCIAL PLANNING AND ADVISING

On April 5, the Ontario Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives released its preliminary policy recommendations.We were encouraged by a number of key consumer protection recommendations that were brought forth by the Committee. FPSC supports the following:

• introduction of title restrictions on those who imply, either expressly or implicitly, that they are financial planners;

• along with the universal adoption of plain language titles, prohibition on non-descriptive titles for those offering various forms of financial advice;

• establishment of a central registry;

• ongoing support for financial literacy initiatives; and

• introduction of a unified set of financial planning standards, including a standard that ensures clients’ interests come before all others.

Each of these points was brought forth to the Committee by FPSC during their original consultations.

The success of any recommendations, however, rests in the details and implementation. Given that the Committee has recommended that the authority to establish universal standards be included in the mandate of the current regulators, if those recommendations proceed, it is imperative that the regulators work closely and cooperatively with FPSC as the national "standards-setter" for financial planning, to ensure that Ontarians are appropriately protected.

FPSC has worked tirelessly over the years to establish unified standards. We recently published – along with the Quebec Institute of Financial Planning (IQPF) – a widely adopted unified set of standards for all

financial planners in Canada, including a single set of standards of practice, ethics and competence. We will be asking the government to acknowledge these already widely accepted standards and adopt them.

We look forward to providing further advice to the Committee as it seeks additional counsel throughout the spring.

CONSUMER RESOURCES:

FinancialPlanningForCanadians.ca FOR CANADIANS SEEKING QUALIFIED PROFESSIONALSLast year, FPSC launched FinancialPlanningForCanadians.ca, a commercial-free, consumer-focused website offering a variety of content pertaining to personal financial planning issues. The site demonstrates the value of financial planning through editorial content, provides tips and information on how to choose the right planner, introduces Canadians to the regulatory gap issue and encourages consumers to use FPSC's Find a Planner or Certificant search tool.

The site is divided into three easy-to-navigate sections:

• Life Happens confronts the impact on financial health of situations that many Canadians face. With the assistance of a number of practicing CFP professionals, it also offers tips to manage financial issues in each life stage.

• Here’s the Plan™ helps Canadians take positive planning action, arming them with the right information and tools to make informed choices. Articles show the value of financial planning, explain the financial planning process, offer tips on how to choose a financial planner, and help consumers learn more about the CFP designation and the standards and enforcement protections when working with a CFP professional.

• Make Your Voice Heard encourages visitors to watch and share a clear, easy-to-understand video about the current gap in consumer protection caused by the absence of holding out restrictions for financial planners in Canada.

FinancialPlanningforCanadians.ca has been viewed more than 90,000 times since its launch in October and has increased the average number of monthly page views of FPSC’s “Find a Planner” tool to 20,000. The site now contains more than 65 articles, with new content being added regularly. Be sure to connect with FPSC on Twitter, Facebook, LinkedIn, YouTube and Google+ to receive notifications of new content that you can share with your network.

SPRING 2016 – 6

BY DAMIENNE LEBRUN-REID, LL.B.FPSC DIRECTOR, STANDARDS AND ENFORCEMENT

FPSC INTRODUCES GUIDANCE TO RULES OF CONDUCT FOR FINANCIAL PLANNING PROFESSION

In March 2016, following approval by the FPSC Board of Directors, FPSC introduced Guidance to a number of the FPSC® Rules of Conduct (the “Rules”) contained in the Standards of Professional Responsibility for CFP® Professionals and FPSC Level 1® Certificants in Financial Planning.

The Guidance is incorporated directly into the Rules and provides practical examples and clarification of the scope and application of various Rules.

IMPORTANCE OF THE GUIDANCE The Guidance was developed to assist the profession by providing clear direction on specific issues that are relevant to the financial planning profession. The Guidance illustrates the professional obligations of CFP professionals and FPSC Level 1® certificants by clarifying the scope and application of various Rules and providing insight into how the Rules may be interpreted by FPSC enforcement staff and by FPSC Hearing Panels, subsequent to a complaint.

The Guidance brings the Rules to life through concrete examples and clear direction to FPSC certificants, who should use the Guidance as a tool to assist in interpreting and implementing the Rules in their daily practice.

Take, for example, the Guidance to Rule 2, which highlights the importance of professional integrity and the type of

conduct – including conduct outside of one’s professional practice – that may impair trust, reflect negatively on one’s integrity and, therefore, be concerning to FPSC. The Guidance provides direction regarding the expected conduct of FPSC certificants as members of a profession.

Similarly, the Guidance to Rule 7 clarifies the increased expectation of FPSC certificants who have discretionary authority over their clients’ investments and circumstances that may give rise to a common law fiduciary relationship between financial advisors and their clients.

The Guidance to Rule 21 includes examples of common situations that may give rise to inadvertent breaches of confidentiality and serves as a reminder that one must always be mindful of his/her surroundings.

CFP professionals often provide concurrent financial planning services to, for example, spouses and family members, and therefore commonly find themselves in joint engagement situations. For this reason, the Guidance provides specific examples relevant to joint engagements including confidentiality of client information and management of conflicts of interest. From complaints received, it is clear that this profession, like most, continues to struggle with the early identification, avoidance and appropriate mitigation of conflicts of interest.

Through the Guidance to Rules 8 and 8.1, FPSC certificants will understand their disclosure obligations; those situations that may give rise to a potential conflict of interest and those that give rise to an actual conflict of interest. The Guidance speaks specifically to conflicts of interest that may arise between clients in joint engagements and provides direction to FPSC registrants who are acting for two or more clients.

BY THE PROFESSION FOR THE PROFESSION: EXTENSIVE CONSULTATION The Guidance was developed following extensive consultation with a variety of stakeholders including representatives from industry organizations; CFP professionals in practice; members of FPSC's Conduct Review Panel and members of FPSC's Professional Practice Working Group, which includes CFP professionals and educators. During the consultation process, input was obtained regarding which Rules should be clarified through Guidance, and which common practice issues would benefit from Guidance.

To review the Guidance, please refer to pages 4-13 in the Standards of Professional Responsibility for CFP Professionals and FPSC Level 1 Certificants in Financial Planning, which can be found at fpsc.ca/standards-enforcement.

SPRING 2016 – 7

Where CFP® professionals have been found by a Hearing Panel to have breached the standards for the profession as established by FPSC, the Hearing Panel may impose disciplinary sanctions ranging from a letter of admonishment to permanent revocation of CFP certification. FPSC makes all Hearing Panel decisions public, in part, by publishing a report on our website at fpsc.ca.

For FPSC Level 1® Certificants in Financial Planning, disciplinary sanctions range from a letter of admonishment to revocation of FPSC Level 1 certification (which may prevent an individual from obtaining CFP certification).

Hearing Panels have issued decisions regarding the following individuals since October 2015:

REPORTS ON FPSC DISCIPLINARY ACTIONS

Douglas Edwards (Cambridge, ON)

By way of Decision dated October 2, 2015, FPSC’s Disciplinary Hearing Panel found that Douglas Edwards breached Rules 201, 202, 601 and 702 of the FPSC® Code of Ethics (The “Code”) and Principles 1, 3, 7 and 8 and Rules 15 and 16 of the Standards of Professional Responsibility for CFP® Professionals and FPSC Level 1™ Certificants in Financial Planning, in effect at the relevant time. The Hearing Panel found that Mr. Edwards engaged in professional misconduct by:

i. Failing to provide his clients with appropriate or prudent financial recommendations consistent with the clients’ stated objectives, contrary to Rules 201, 202 and 702;

ii. Failing to take into consideration the clients’ lack of financial knowledge and experience when making recommendations, contrary to Rules 201, 202 and 702 and Principles 1 and 8 and Rules 15 and 16;

iii. Making inappropriate recommendations to his clients, contrary to Principle 2 and Rules 201, 202, 601 and 702 and Principles 1, 3, and 8; and

iv. Failing to exercise appropriate due diligence before making recommendations to his clients, contrary to Principle 7 and 8.

By way of Order, dated December 10, 2015, Mr. Edwards was barred from being certified or recertified by FPSC for a period of five (5) years. Mr. Edwards is prohibited from using the CFP certification marks in all correspondence and representations of himself, pending recertification. In order to be eligible for recertification, Mr. Edwards must successfully complete an FPSC-Approved Capstone Course and successfully rewrite the CFP examination. The Hearing Panel further ordered that Mr. Edwards pay costs to FPSC in the amount of $3,000.

Rodney White (Pembroke, ON)

By way of Decision dated December 11, 2015, FPSC’s Disciplinary Hearing Panel found that Rodney White breached Principles 1, 2, 5, 7, 8, Rule 2 and 8(b) of the FPSC® Code of Ethics and FPSC® Rules of Conduct contained in the Standards of Professional Responsibility for CFP® Professionals and FPSC Level 1™ Certificants in Financial Planning. The Hearing Panel found that Mr. White engaged in professional misconduct by:

i. Failing to disclose potential conflicts of interest to his client, thereby breaching Rule 8(b);

ii. Failing to act in his client’s best interests, contrary to Principles 7 and 8;

iii. Engaging in conduct which reflects adversely on his integrity and fitness as a CFP professional, thereby breaching Principles 1, 2, and 8 and Rule 2; and

iv. Failing to maintain his client’s confidentiality contrary to Principle 5.

By way of Order, dated March 18, 2016, Mr. White’s certification with FPSC was suspended for a period of one (1) year commencing April 1, 2016 and ending March 31, 2017. During the suspension, Mr. White is prohibited from using the CFP certification marks. The Panel further ordered that Mr. White complete an FPSC-Approved Continuing Education credit in the Professional Responsibility category prior to seeking to renew or reinstate his certification. The Hearing Panel further ordered that Mr. White pay costs to FPSC in the amount of $8,250.

Douglas Williamson (Nanoose Bay, BC)

By way of Decision dated January 21, 2016, FPSC’s Disciplinary Hearing Panel found that Mr. Douglas Williamson breached Rule 24 of the Standards of Professional Responsibility for CFP® Professionals and FPSC Level 1® Certificants in Financial Planning by failing to respond to FPSC’s communications and cooperate with FPSC’s investigation.

By way of Order dated April 12, 2016, Mr. Williamson’s certification with FPSC was suspended until he provides FPSC with a complete and substantive response to FPSC’s communications, to the satisfaction of the Director, Standards and Enforcement. The suspension will continue until May 1, 2017, if conditions are met. The Hearing Panel further ordered that Mr. Williamson’s certification be revoked on May 2, 2016 if he fails to meet the conditions outlined in the Order by May 1, 2016. The Hearing Panel further ordered that Mr. Williamson pay costs to FPSC in the amount of $1,655.

Alan Connors (Toronto, ON)

By way of decision dated March 3, 2016, FPSC’s Disciplinary Hearing Panel found that Alan Connors breached Rule 24 of the Standards of Professional Responsibility for CFP® Professionals and FPSC Level 1® Certificants in Financial Planning by failing to respond to FPSC’s communications and cooperate with FPSC’s investigation.

The Hearing Panel convened on April 28, 2016 to deliberate with respect to penalty, but has not yet released its Decision and Order on Penalty. Any decisions issued by the Hearing Panel will be reported at fpsc.ca/disciplinary-reports.

FPSC publishes Reports on Disciplinary Actions and public notice of upcoming Enforcement Hearings at fpsc.ca, in accordance with the Policy on the Publication of Disciplinary Information.

SPRING 2016 – 8

BY DR. MOIRA SOMERS, PH.D., C.PSYCH.CLINICAL NEUROPSYCHOLOGIST

WHY GOOD CLIENTS IGNORE GREAT ADVICE

Stick around this life long enough, and you’ll become aware of a painful truth about the human condition: we often don’t do the things we ought to be doing for our own well-being. Researchers use the term ‘non-adherence’ to describe this lack of follow-through when it comes to advice.

THE COMPLEXITY BARRIER Many factors contribute to financial non-adherence. Some of those are well beyond the control of the professional, whereas others fall solidly within the domain of what you can influence or direct. This article focuses on one of the major determinants of non-adherence that IS under your control – namely, advice complexity.

In my work as a financial psychologist, I frequently encounter people who are in serious need of investment or insurance advice but who refuse to darken the door of a financial professional. The number one reason they cite? “I hate those meetings. I end up feeling stupid. And I never know whether they’re exploiting my stupidity to sell me stuff I don’t need.”

Skilled professionals deliver advice in a manner that makes clients feel well-informed and confident with the agreed-upon course of action. A big part of that skill lies in ensuring mutual understanding.

By contrast, unskilled advisors set clients up to feel stupid by:

• assuming a level of background knowledge that is not, in fact, present

• using jargon

• presenting too much information at once

THE CURSE OF KNOWLEDGEIt is estimated that physicians learn over 13,000 new terms in the course of their training. I suspect financial professionals are not far behind. No matter our profession, we’re all vulnerable to something that economists have dubbed “The Curse of Knowledge”: once we know something, it’s difficult to remember what it was like to not know that thing. It’s even more difficult to understand and predict the actions of people who don’t share the knowledge. Too often, we incorrectly assume that clients have a greater degree of financial sophistication than they in fact possess.

Need proof? Consider this: according to the federal Task Force on Financial Literacy, the average Canadian does not have the requisite level of financial knowledge to understand a credit card statement or a cell phone bill. How, then, do you suppose the average person fares when presented with a typical investment prospectus or an array of insurance options, let alone a comprehensive financial plan? “I feel like a blithering idiot!,” one highly educated client told me when

describing his earlier meeting with a CFP® professional. As a result, he will not be returning for a second meeting.

I happen to know the planner involved. She’s highly competent, ethical and caring. But she failed to appreciate and mitigate the Curse of Knowledge. She assumed that this prospective client’s obvious intelligence and education meant that he knew more than he did about the domain of finance. And she discovered a stark reality: in order to avoid feeling stupid, people will put their financial futures at risk.

OVERCOMING THE IMPLEMENTATION IMPASSEIn the next issue, we will examine some simple ways to overcome this problem that you can put into practice immediately.

About Dr. Somers: A clinical neuropsychologist, professor and financial recovery expert, Dr. Somers is also on the faculty with the Sudden Money Institute, where she trains advisors (many of whom are CFP professionals) on the psychological factors at play during major life transitions. She was a speaker at the FPSC 2015 CFP Professional Symposium held during Financial Planning Week.

SPRING 2016 – 9

BY MICHEL LEDUC CPPIB SENIOR MANAGING DIRECTOR & GLOBAL HEAD OF PUBLIC AFFAIRS AND COMMUNICATIONS

CANADA PENSION PLAN INVESTMENT BOARD UPDATE

Every solid financial plan is cause for celebration.

In my role as Global Head of Public Affairs & Communications at Canada Pension Plan Investment Board (CPPIB), I see the questions that Canadians ask us, and I appreciate how daunting retirement planning can be. Earlier in my career I worked on financial literacy initiatives, so I also appreciate the valuable role that financial planners play.

Financial planners don’t just crunch numbers; they are coaches, educators, and trusted advisors. My colleagues and I have been chatting with advisors recently and are aware of the significant challenges involved in educating Canadians about the Canada Pension Plan (CPP) alone, not to mention the rest of their finances. Some Canadians overestimate the value of the benefits that they will receive from the CPP and aren’t saving enough as a result. Others mistakenly believe the CPP won’t be there when they retire. This latter belief is particularly detrimental because people have a tendency to bury their heads in the sand when they’re overwhelmed by the prospect of starting to save for retirement. Once they realize that they have a solid foundation in the CPP, they gain confidence to put together a plan that allows them to build on that.

We also receive questions from financial planners who are curious about our organization and investment strategy. CPPIB, which is based in Toronto, has a clear and sole purpose – to maximize returns without taking excessive risk. We operate at arm’s-length from government and make investment decisions based solely on the long-term benefit to the CPP Fund, not any other political policy objective.

CPPIB was created in the 1990s to generate long-term investment income to help pay CPP benefits. It was clear at the time that Canada’s aging population posed a threat to the future stability of the Fund. CPPIB has since added more than $150 billion to the Fund, which has become a model for other countries. Thanks to a unique combination of characteristics of the CPP Fund, including its funding model and lengthy investment horizon that stretches over generations, it is prudent for us to have a higher investment risk threshold than most of our peers. Our 10-year average real rate of return is 6.2%, well above the 4% long-term return that is required to ensure the fund is sustainable for at least the next 75 years.

Given Canada’s relatively small economy, more than three-quarters of the portfolio is now invested abroad. Last year we opened an office in Mumbai, in addition to our offices

in Hong Kong, London, Luxembourg, New York and São Paulo. Having a local presence allows us to scout, source and manage complex investment opportunities. We have private holdings in 41 countries, ranging from the leading electrical transmission company in Chile to the largest urban shopping centre in Europe. Our long investment horizon also enables us to take advantage of opportunities in geographies and asset classes that are facing short-term pressures, such as Brazil.

If you’re interested, I would encourage you to spend some time on our website (cppib.com) or email us with any questions at contact@cppib.com. The challenge of preparing Canadians for retirement is indeed a daunting one, but by collaborating we might be able to make it a little bit easier.

SPRING 2016 – 10

RESOURCES TO DEFINE FINANCIAL PLANNING & EXPECTATIONS OF PLANNERS

While it is understood that Certified finanCial Planner® professionals must have the knowledge, skills and abilities to serve the financial planning needs of all Canadians, the FPSC Level 1 certification was introduced in 2014 to ensure that consumers with less complex financial planning needs could also access and benefit from the services of a qualified financial planning professional subject to the same ethical obligations as a CFP professional.

The task was to define financial planning and a financial planner; the competence expectations of a financial planner versus a certificant; and their ability to suitably address different client situations. To that end, Financial Planning Standards Council (FPSC) has engaged over the course of the last two years with industry firms, CFP professionals and educators to develop more explicit information and guidance that defines the practice, conduct and knowledge expectations of CFP professionals and FPSC Level 1 certificants.

This series of publications not only clarifies the definitions and standards expected of those in the financial planning profession, but offers a distinction between Certified finanCial Planner® professionals and certificants. They also demonstrate to educators, employers and potential employers the knowledge, skills and abilities that can be expected of a professional certified by FPSC, and distinguish those in the financial planning

profession from all other forms of financial advisors. They aid government and other interested parties in understanding the unique nature of the financial planning profession, and offer the financial services industry a common nomenclature when referring to a financial planner and financial planning. All aimed to better address the needs of the Canadian public.

To ensure the necessary clarity for a variety of stakeholders, a number of initiatives have been undertaken over the past 24 months.

CANADIAN FINANCIAL PLANNING DEFINITIONS, STANDARDS & COMPETENCIESLast year, FPSC and Institut québécois de planification financière (IQPF) jointly published the Canadian Financial Planning Definitions, Standards & Competencies, the first unified set of financial planning definitions and standards in Canada. Developed in consultation with financial planners and industry leaders from across the country, the national standards and definitions establish a unified code of ethics and a common set of practice standards by which individuals holding the CFP designation and F.Pl. title must abide. They also define the ethical and performance standards that clients should expect from a professional relationship. The publication has been widely accepted and embraced by the financial services industry and lays the foundation for advancing financial planning as a distinct professional practice in Canada.

GUIDANCE TO THE FPSC® FINANCIAL PLANNING PRACTICE STANDARDSAs a next step toward defining what is expected of financial planners, FPSC, in consultation with financial planners, industry firms and educators, developed Guidance to the FPSC® Financial Planning Practice Standards. Two case studies that exemplify integrated financial planning and the professional skills expected of an FPSC Level 1 certificant and a CFP professional form the backdrop of the Guidance. FPSC looks forward to continuing to work with industry and CFP professionals to further build out the practice of financial planning for additional guidance to FPSC certificants.

PROJECTION ASSUMPTION GUIDELINESAn important part of a financial planner’s work involves projecting the needs of their clients, including retirement needs, insurance needs, education needs, the needs of disabled children, etc. FPSC and IQPF joined together once again in 2015 to develop the unified Projection Assumption Guidelines to assist with those projections. Developed by a committee of actuarial and financial planning professionals and updated annually, the Projection Assumption Guidelines are intended as an aid in making medium and long-term financial projections that are free from potential financial planner biases or predispositions. The release of the 2016 edition of the Guidelines is imminent and will include enhancements based on industry and CFP professional consultations.

BY JOAN YUDELSON FPSC VP, PROFESSIONAL PRACTICE

SPRING 2016 – 11

IN MEMORY OF DONALD J. JOHNSTON, FPSC FOUNDING PRESIDENT AND CEOWe were extremely saddened to hear of the February passing of Donald J. Johnston, FPSC’s Founding President and CEO, who led FPSC through its first decade of development and operation. Don’s vision of the establishment of financial planning as a profession in Canada, distinguished by the Certified finanCial Planner® certification, set the foundation for the evolution of financial planning in Canada.

Among Don’s most important contributions was the negotiation of the much sought-after agreement to sub-license the internationally recognized CFP® marks in Canada. His talent and tenacity brought together a traditionally disparate group of key players in the financial services industry in an unprecedented cooperative effort that brought FPSC (then called the Financial Planners Standards Council of Canada) into existence in November 1995. During his time at FPSC, he played a leadership role in advancing the financial planning profession, including his election as Chair of the International Advisory Council to the global Financial Planning Standards Board.

Prior to his work with FPSC, Don’s career was long and varied, encompassing

education, private business and association management. He served as Vice President and COO of the Canadian Institute of Financial Planning, was a partner and National Director of Education Standards at Ernst and Young, Toronto, and was elected a Fellow in the Canadian Institute of Chartered Accountants during his tenure as Professional Practice Director of the School of Accountancy at the University of Waterloo. He also served as Dean of Academic Studies in the School of Business at McMaster University.

Following his retirement from FPSC in 2005, Don and his wife enjoyed many happy and robust years on their country farm.

In 2006, FPSC established the Donald J. Johnston Award to formally recognize and honour Don’s spirit, imagination, dedication and contribution in establishing and leading FPSC through its first successful decade as the standard-setting organization for the emerging financial planning profession in Canada.

FPSC extends its heartfelt condolences to Don’s family and friends.

GUIDANCE TO THE FPSC® RULES OF CONDUCTIn March 2016, FPSC introduced Guidance to a number of the FPSC® Rules of Conduct, contained in the Standards of Professional Responsibility for CFP Professionals and FPSC Level 1 Certificants in Financial Planning. Incorporated directly into the Rules, the Guidance illustrates the professional obligations of CFP professionals and FPSC Level 1 certificants, offers practical examples, clarifies the scope and application of various Rules, and provides insight into how the Rules may be interpreted by FPSC’s independent Conduct Review

Panel set up to review FPSC investigation reports and FPSC’s Hearing Panels. For more on the Guidance, please refer to page 6 in this issue.

FINANCIAL PLANNING BODY OF KNOWLEDGEThe Financial Planning Body of Knowledge offers clarity in the knowledge expectations of CFP professionals and FPSC Level 1 certificants. The work makes clear the depth of knowledge required in the practice of financial planning and provides case study illustrations that reflect the application of knowledge in practice. The document is

expected to be completed this year for validation by CFP professionals and use by educators in preparing the next generation of financial planning professionals.

To access the resources and publications discussed, please visit fpsc.ca.

“Industry representatives, CFP professionals and educators have come together to play a critical role in the development of the financial planning profession in Canada. On behalf of Canadians, we thank them for their dedication and their continued contribution in the advancement of this important work.”

SPRING 2016 – 12

PREDICTING A PERSON’S LIKELIHOOD TO SEEK PROFESSIONAL FINANCIAL HELP:

FINANCIAL STRESS AND SELF-EFFICACY

In 2012, FPSC released the Value of Financial Planning, a study that revealed Canadians with financial plans feel they are saving more, living well, and experiencing higher levels of overall contentment in their lives. Despite these positive findings, the unanswered question was why more people were not seeking out a professional to develop a financial plan. Understanding these factors may allow more Canadians to experience the benefits identified in the study.

As a result, the Financial Planning Foundation funded a new study, conducted by researchers Jodi Letkiewicz, Chris Robinson and Dale Domian of York University, to look at the behavioural aspects of financial planning. This study was motivated by interest in the types of factors – aside from wealth and income – that lead people to seek help.

The researchers focused specifically on two behavioural experiences or traits – financial stress and self-efficacy (the belief in one’s own ability to succeed) – and analyzed how both traits predict a person’s likelihood to seek professional financial help. The research concluded that financial stress alone is not enough for people to seek financial help. Instead, it is self-efficacy that is a consistent and strong predictor of help-seeking behaviour. In fact, financial stress without self-efficacy tended to

decrease the likelihood that one would seek the help they need. Those who believe they can succeed are more likely to seek the help they need to succeed.

4 WAYS TO INCREASE SELF-EFFICACY:

1. Performance AccomplishmentsAccomplishments influence your sense of mastery. One idea is to encourage clients to set a simple goal: for example, to pay off any non-mortgage debt by a certain deadline. This plan requires money management (to reduce spending) and a measure of self-discipline, but is ultimately an achievable goal. This is a good way to inspire confidence and motivation for more advanced tasks.

2. Vicarious ExperiencesThese occur when you observe someone like yourself succeeding at a task. Communications and advertising can highlight success stories to appeal to a diverse audience and provide valuable information and guidance to help people get started.

3. Verbal PersuasionFinancial planners should encourage clients by providing constructive feedback to build and maintain a sense of self-efficacy. Workers in social agencies dealing with clients with low financial literacy find this technique effective. Verbal persuasion goes hand-in-hand with performance accomplishments. A little belief in someone can go a long way.

4. Physiological StatesThe way you experience, interpret and evaluate emotional states is important in developing self-efficacy beliefs. Extremely nervous or anxious people tend to doubt themselves and may therefore have a weak sense of self-efficacy. This is in line with our finding that stress can either paralyze or mobilize someone to seek financial help. One way to reduce stress and anxiety about household finances is to establish basic ground rules and commit to a plan. This can help facilitate an environment with well-established goals and principles and can facilitate positive communication and behaviours around a shared goal, thus reducing stress and anxiety.

For more information about the Financial Planning Foundation, and how you can support important financial planning research, please visit fpfoundation.ca.

SPRING 2016 – 13

Canada’s Finance Minister Bill Morneau met with FPSC’s VP, Policy and Regulatory Affairs and General Counsel Stephen Rotstein at the 2016 Visa Financial Literacy Summit in Chicago on April 20.

Cary List, FPSC President & CEO, Malcolm Heins, Chair of Ontario Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives, and Dawn Hawley, FPSC Board Chair at the Financial Planning Standards Board International Meetings held in Canada on April 2-8.

WHAT’S HAPPENING@ FPSC_CANADA 2016

Recent EventsMay 30 - Jun 3

Item writing workshops with CFP professional volunteers in St. John’s, NL.

Jun 3The CFP® examination and FPSC Level 1® Examination in Financial Planning are held at various locations across Canada. Registration closes one month prior to the exam.

Jul 14 and 21

Results of the June 2016 CFP examination and FPSC Level 1 examination are available.

SepCFP Professional Ambassadors head back into Core Curriculum classrooms across the country to educate students on the value of the CFP designation. To book an Ambassador for your school, email candidates@fpsc.ca.

Oct 3-7 Item writing workshops with CFP professional volunteers in Toronto, ON.

Oct 28-29

CFP Professional Competency Profile Re-Validation Task Force Meeting in Toronto, ON with CFP professionals and industry representatives.

Oct/Nov FPSC’s national consumer awareness campaign begins— watch for details.

Nov 20-26

8th Annual Financial Planning Week takes place across Canada. Visit FinancialPlanningWeek.ca for more information.

Nov 22Celebration of the Profession Reception and Dinner in Toronto, hosted by FPSC in conjunction with Financial Planning Week. Seats can be reserved in September.

Nov 23Ethics Breakfast Session (Toronto), hosted by FPSC in conjunction with Financial Planning Week. Seats can be reserved in September.

Nov 23

CFP Professional Symposium (Toronto), hosted by FPSC in conjunction with Financial Planning Week. With a theme of “Distinction That Matters” and an outstanding lineup of speakers, this promises to be an event not to be missed. Watch for more details and the opportunity to purchase seats in September.

Nov 25Ethics Breakfast Session (Vancouver), hosted by FPSC in conjunction with Financial Planning Week. Seats can be reserved in September.

Nov 25

CFP Professional Symposium (Vancouver), hosted by FPSC in conjunction with Financial Planning Week. With a theme of “Distinction That Matters” and an outstanding lineup of speakers, this promises to be an event not to be missed. Watch for more details and the opportunity to purchase seats in September.

Nov 25The CFP examination and FPSC Level 1 Examination in Financial Planning are held at various locations across Canada. Registration closes one month prior to the exam.

®

CFP®, Certified finanCial Planner® and are certification trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planning Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB. All other ® are registered trademarks of FPSC, unless indicated. ©2016 Financial Planning Standards Council. All rights reserved.

Become aCertified Necessity.Helping people plan for their financial future isn't just a way to make a living. It’s a way to make a difference. When you become a Certified finanCial Planner® professional, you have the opportunity to give clients peace of mind. Research shows that Canadians who work with a CFP®

professional feel their financial goals and retirement plans are more on track, their ability to save has improved, and they’re more confident they can handle the inevitable bumps in life.

Learn how to earn the CFP designation. It’s the industry standard in financial planning—don’t settle for less.

To learn more about CFP certification, visit beafinancialplanner.ca.