CIFPs Conference - June 11, 2007

 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

 Is financial planning a profession?
 Why or why not?
CIFPs Conference - June 11, 2007

 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

 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

FPSC’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

FPSC’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

The 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

The 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

For 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

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

The 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

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

Facts – More Good News

 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 o “Cares about me” o “is accessible” o “is in tune with my needs”
CIFPs Conference - June 11, 2007

The Less Good News
 Consumer Perceptions
 Very strong association with “salesperson”
 Weak association with important characteristics of a profession o Consistent o Thorough o Unbiased o Professional
CIFPs Conference - June 11, 2007

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

 Poor understanding of what financial planning represents, and its public value
 Case in point…
CIFPs Conference - June 11, 2007

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

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

Who’s Going to Fix Them?
 FPSC’s responsibilities
 CFP
 professionals’ responsibilities
CIFPs Conference - June 11, 2007

 Establish appropriate requirements for entry to the profession consistent
(“inputs”)
 Rigorous Examination
 Appropriate experience requirements
 Appropriate, relevant education
CIFPs Conference - June 11, 2007

 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

FPSC’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

Standards for CFP Professionals
 Ethical conduct
 Practice
 Competent performance
CIFPs Conference - June 11, 2007

Ethical Conduct
 Defined by Code of Ethics
 Well established
 Well defined
 Well adhered to
 Rigorous systems in place to enforce
CIFPs Conference - June 11, 2007

Standards of Practice
 Practice Standards
 Well established?
 Well adhered to?
 Rigorous systems in place to enforce?
CIFPs Conference - June 11, 2007

Why 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

Reaction 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

Implementation 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

FPSC’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

Ongoing 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

Overcoming 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

The 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

Gaps
 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

FPSC’s Competency Profile

 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

Defining 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

Defining 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

Defining the Profession
 Next step – if we can get over that hurdle
 Define the profession worldwide
 No small task!
CIFPs Conference - June 11, 2007

Good News!
 We Did It!
CIFPs Conference - June 11, 2007

Premise – 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

Distinction 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

Fundamental 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

Why 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

Competency-Based Approach
More than knowledge, More than proficiency

CIFPs Conference - June 11, 2007

More than just knowledge


CIFPs Conference - June 11, 2007

Profile 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

Profile 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

Profile 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

Profile Overview - Knowledge
 Knowledge elements were identified only after establishment of competencies.
 11 Knowledge domains established
CIFPs Conference - June 11, 2007

International 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

Fundamental
Financial
Planning
Practices
COLLECTION
1.0 Collects the information required to create a financial plan.
1.001
Identifies the client’s objectives, needs and values that have financial implications
1.002
Identifies the information required for the financial plan
1.003
Determines client’s attitudes and level of financial sophistication
1.004
Identifies material changes in the client’s personal and financial situation
1.005
Prepares information to enable analysis
CFP PROFESSIONAL COMPETENCY PROFILE
FINANCIAL PLANNING FUNCTIONS
ANALYSIS
2.0 Identifies potential opportunities and constraints and assesses information to formulate strategies.
SYNTHESIS
3.0 Synthesizes information to formulate and evaluate strategies to create a financial plan.
2.001
Analyzes the client’s objectives, needs, values and information to prioritize the financial planning components
2.002
Identifies inter-relationships among financial planning components
2.003
Identifies opportunities and constraints and assesses collected information across financial planning components
2.004
Assesses the impact of economic, political and regulatory environment
2.005
Measures the progress towards achievement of objectives of the financial plan
3.001
Prioritizes recommendations from the financial planning components to optimize the client’s situation
3.002
Consolidates the recommendations and action steps into a financial plan
3.003
Determines the necessity to revise the financial plan
CORE FINANCIAL PLANNING COMPETENCIES
2.1
Identifies potential opportunities and constraints
2.2
Assesses information to formulate strategies
3.1
Formulates and evaluates strategies to create a financial plan
1.1
Collects the quantitative information required to create a financial plan
1.101
1.102
Collects information regarding the client’s assets and liabilities
Collects information regarding the client’s cash flow, income and/or obligations
1.103
1.104
Collects information necessary to prepare a budget
Identifies the legal issues that affect financial management
1.105
Prepares statements of the client’s net worth, cash flow and budget
1.106
1.107
1.108
1.109
1.110
Collects information necessary to prepare detailed statement of investment holdings
Determines the client’s current asset allocation
Identifies cash flows available for investment
Collects details of the client’s existing insurance coverage
Identifies potential financial obligations
1.2
Collects the qualitative information required to create a financial plan
1.201
Determines the client’s propensity to save
1.202
Determines how the client makes spending decisions
1.203
Determines the client’s comfort with debt
1.204
Determines the client’s experience, attitude and biases with investments
1.205
Determines the client’s investment objectives
1.206
Determines the client’s tolerance for investment risk
1.207
Identifies the client’s return expectations
1.208
Identifies the client’s time horizon
1.209
Determines the client’s risk management objectives
1.210
Determines the client’s tolerance for risk exposure
1.211
Determines relevant lifestyle issues
1.212
Determines health issues
1.213
Determines the client’s willingness to take active steps to manage financial risk
2.101
Determines whether the client is living within financial means
2.102
Determines the issues relevant to the client’s assets and liabilities
2.103
Determines the client’s emergency fund provision
2.104
Identifies potential cash management vehicles
2.201
Assesses whether the emergency fund is adequate
2.202
Assesses the impact of potential changes in income and expenses
2.203
Identifies conflicting demands on cash flow
2.204
Assesses financing alternatives
2.105
Calculates required rate of return to reach client's objectives
2.106
Determines the characteristics of
2.107
investment holdings
Determines the implications of disposing of assets
2.108
Identifies potential investment vehicles
2.205
Assesses whether investment return expectations are consistent with risk
2.206
tolerance
Assesses whether asset holdings are consistent with risk tolerance and required rate of return
2.109
Determines characteristics of insurance coverage
2.110
Identifies potential risk management vehicles
2.207
Assesses exposure to financial risk
2.208
Compares the client’s risk exposure to current coverage
2.209
Assesses the implications of changes to insurance coverage
2.210
Prioritizes the client’s risk management needs
3.101
3.102
3.103
3.104
3.105
3.106
3.107
3.108
3.109
3.110
3.111
3.112
Develops financial management strategies
Evaluates advantages and disadvantages of each financial management strategy
Optimizes strategies to make financial management recommendations
Prioritizes action steps to assist the client in implementing financial management recommendations
Develops asset management strategies
Evaluates advantages and disadvantages of each asset management strategy
Optimizes strategies to make asset management recommendations
Prioritizes action steps to assist the client in implementing asset management recommendations
Develops risk management strategies
Evaluates advantages and disadvantages of each risk management strategy
Makes risk management recommendations
Prioritizes action steps to assist the client in implementing risk management recommendations

CIFPs Conference - June 11, 2007

Relevance to Building the Profession
 Financial planning, perhaps more than any other profession, has unique country-specific knowledge requirements
 A profession cannot exist solely within a single country
 Financial planning competency is universal – only the underlying knowledge changes from country to country, and even there, the domains of knowledge remain consistent worldwide
CIFPs Conference - June 11, 2007

Relevance to the CFP Planner
 Serves as reminder of expectations for competent performance
 Helps employers better understand and market the value proposition
 Gives clients firm understanding of what you can do for them
 Serves as basis for continuous professional development
 Further distinguishes you
CIFPs Conference - June 11, 2007

What’s it to you?
 Read it
 Understand it
 Use it to validate your own competence
 Paraphrase it to help your clients understand what you can do for them
 Believe in the value of its contents
 Make your clients understand the value
 Be proud to be a CFP

!
CIFPs Conference - June 11, 2007

What Next?
CIFPs Conference - June 11, 2007


 The Gold Standard of Financial Planning
 Truly desirable professional pursuit
 In high demand
 Influential by virtue of its stature
CIFPs Conference - June 11, 2007

Desired Outcomes
 Respect in the profession and CFP
 professionals
 We’re not quite there yet…
CIFPs Conference - June 11, 2007

What can FPSC do?
 Partner with universities
 Partner with allied professions
 Focus promotion efforts on the FP value proposition
 Focus more on employers
 Better-align education and continuous professional development
CIFPs Conference - June 11, 2007

Changes Ahead
 Build and leverage external relationships
 Attract new high quality candidates to the profession and develop students
 Help to ensure appropriate support and development structures to help CFP professionals develop professionally and contribute to the growth of the profession
CIFPs Conference - June 11, 2007

Changes Ahead
 Develop government and regulatory relations
 Enhance certification system and pathways
 Enhance our governance structure
 Hear more from you
CIFPs Conference - June 11, 2007

In Closing
 We can lead, but ….
 Professions are built from within
 Get involved
 With FPSC
 With your association
 Believe
 Our standards are your standards!
CIFPs Conference - June 11, 2007

…now let’s go step it up!
CIFPs Conference - June 11, 2007