2. Towards a Profession Cary List EVP and COO Financial Planners Standards Council …. The CFP Yesterday, Today and Tomorrow

3. Towards a Profession Today’s discussion:  What makes a profession?  Does financial planning meet the test?  Should the CFP community strive for recognition as a profession?  If so, how do we get there? ….The CFP Yesterday, Today and Tomorrow

4. Towards a Profession  What makes a profession a profession?

5. Towards a Profession “A calling, requiring specialized knowledge…including instruction in skills and methods [and the] scholarly principles underlying such skills and methods, maintaining, by force of organization or concerted opinion high standards of achievement and conduct, and committing its members to continued study and to a kind of work which has for its prime purpose the rendering of public service.” 1 1 Webster’s New International Dictionary A Profession Defined – My Favourite Definition

6. Towards a Profession  Is Financial Planning a Calling? If so, what exactly is the calling that is financial planning? More in a few moments A Profession Defined One Piece at a Time:

7. Towards a Profession  Do CFPs “require specialized knowledge”? Clearly yes – but is it the “right” knowledge? More on this in a few moments too! A Profession Defined – One Piece at a Time

8. Towards a Profession  Instruction in Skills and Methods? Yes, through FPSC’s rigorous education program, but… A Profession Defined – One Piece at a Time

9. Towards a Profession  “High standards of achievement and conduct maintained by force of organization and/or concerted opinion?” Yes, through FPSCs Examination and Ethics standards, and through enforcement of same A Profession Defined – One Piece at a Time

10. Towards a Profession  Requirement for “continued study”? Yes, through CE requirements. A Profession Defined – One Piece at a Time

11. Towards a Profession  Are members of the greater CFP community committed to “a kind of work which has for its prime purpose the rendering of public service”? A Profession Defined – One Piece at a Time

12. Towards a Profession  While many CFPs are committed to serving the public good, if it is to be a true profession financial planning must: Not be seen as solely a marketing tool Be recognized as serving the public good A Profession Defined – One Piece at a Time

13. Towards a Profession Two more key pieces of the puzzle  Two key pieces are missing: At its heart, a profession must include uniformity and consistency of service That is, Financial planning is financial planning is financial planning

14. Towards a Profession  If a tree falls in the forest….that is,  Without:  Public recognition of the CFP  Perceived public value  Recognition of financial planning as a public service  Can we really call financial planning a true profession? Two more key pieces of the puzzle

15. Towards a Profession  Where is the CFP Today? 16,000-strong Growth exclusively through its rigorous certification program 97% annual retention rate Brand awareness continues to grow No credible alternative professional financial planning designation Before we proceed…

16. Towards a Profession Commitment of key individuals and organizations to stay the course towards consolidation of “alphabet soup” of designations Commitment to highest standards and 4E program Commitment to serving the public interest Commitment of dedicated CFP professionals ….But, our work is far from done…. How did we get here?

17. Towards a Profession  Recent poll and survey Very limited provision of comprehensive financial planning Very few pay for financial planning service directly Most Canadians feel having a financial plan is at least somewhat important to them, but… Most don’t have a plan, and… Of those that do have a plan, most didn’t use a financial planner to design it! A little reality check

18. Towards a Profession  While most Canadians believe having a financial planning designation is important… They don’t know what the designations are!  Most believe that financial planning is regulated, and therefore assume… “If my advisor’s a financial planner, he must be qualified!” A little reality check

19. Towards a Profession  Clearly, much work is still needed on:  Public understanding of what financial planning is, let alone the CFP  Perceived public value to using a CFP professional  Recognition of financial planning as a public service A little reality check

20. Towards a Profession FPSC MISSION  “FPSC benefits the public by leading the evolution of the financial planning profession in Canada through the development, enforcement and promotion of the highest competency and ethical standards in financial planning as identified by individuals who have earned the CFP designation.”

21. Towards a Profession  We must: Define “the calling” that is financial planning Ensure that the “specialized knowledge” is appropriate for the delivery of professional financial planning Ensure relevance of the “instruction in skills and methods” How do we achieve our mission?

22. Towards a Profession  We must: Help establish “concerted opinion” around standards of achievement, practice and conduct Ensure relevance of requirements for “continued study”. How do we achieve our mission?

23. Towards a Profession  We must: Never lose sight of “rendering of public service” and the public good by: Ensuring uniformity and consistency of service Continuing to build public awareness about financial planning and the CFP, and the benefits that financial planning brings to Canadians How do we achieve our mission?

24. Towards a Profession  Spread the word  Define financial planning  Establish clear standards of practice for professional financial planners  Establish extensive, clearly defined proficiency standards for CFP professionals Four specific initiatives to help

25. Towards a Profession  “If you build it they will come” – or will they?  Thus, FPSC’s Brand Ambassador program Leverage the message through the greater CFP community Get the message out! 1. Spreading the Word

26. Towards a Profession  What is financial planning?  Who can benefit from financial planning?  Who are qualified to offer professional financial planning?  Where can they learn more?  www.cfp-ca.org Brand Ambassador Program – 4 Key Messages

27. Towards a Profession The Brand Ambassador Program It’s a heavy load….. We can’t do it alone!

28. Towards a Profession  Until now, we have not had a clear and concise articulation of exactly what financial planning is  How can we expect others to embrace financial planning as a profession if we don’t all speak the same language? 2. Defining Financial Planning

29. Towards a Profession  “Financial Planning is the process of creating strategies, considering all relevant aspects of a client’s financial situation, to manage one’s financial affairs to meet life goals.” Financial Planning Defined

30. Towards a Profession  Definition underlies all other projects, including: Practice Standards Competency Profile Financial Planning Defined

31. Towards a Profession  What will Practice Standards accomplish? Help establish “concerted opinion” around standards of achievement, conduct and delivery Ensure uniformity and consistency of service Build on the definition of financial planning 3. Establishing Clear Standards of Practice

32. Towards a Profession CFP Practice Standards – the Building Blocks  Identifies what is the expected behaviour of all CFP professionals in all aspects of work  Mandatory for all CFP professionals, but not necessarily specific to the practice of financial planning Code of Ethics

33. Towards a Profession  Lays out what planners should do when performing financial planning Financial Planning Process CFP Practice Standards – the Building Blocks

34. Towards a Profession  Financial Planning Process  Code of Ethics CFP Practice Standards – the Building Blocks

35. Towards a Profession  Bring together process and Code of Ethics  Serve to ensure consistency and uniformity of practice, while still leaving room for creativity and professional judgement  Assist CFP professionals by providing guidance and clarity What are CFP Practice Standards?

36. Towards a Profession  Apply, at least in part, to both comprehensive financial planning and to components thereof  Some professional judgement involved Applicability of the CFP Practice Standards

37. Towards a Profession Financial Planning:  Includes all components of a comprehensive financial plan: Financial Management Asset Management Tax Planning Risk Management Retirement Planning Estate Planning Definition of Financial Planning - Revisited

38. Towards a Profession  Financial Management Strategies and techniques to optimize short- and mid-term cash flows, assets and liabilities  Asset Management Strategies and techniques to optimize returns on assets in consideration of the client's requirements and constraints Financial Planning Components Defined

39. Towards a Profession  Risk Management Strategies and techniques to manage exposure to financial risk  Tax Planning Strategies and techniques to maximize present value of after-tax family net worth Financial Planning Components Defined

40. Towards a Profession  Retirement Planning Strategies and techniques for accumulation of wealth and for withdrawal during retirement years  Estate Planning Strategies and techniques for preservation and distribution of accumulated assets Financial Planning Components Defined

41. Towards a Profession The “applicability” test:  Are the creation of strategies involved?  Are all relevant aspects of the client’s financial situation to be considered? The CFP Practice Standards

42. Towards a Profession  Desired Outcomes Clarify expectations, both for CFP professionals and the public Result in better-informed public Raise confidence in CFP professionals The CFP Practice Standards

43. Towards a Profession  Development began three years ago  10 draft standards were introduced in September 2002 The CFP Practice Standards - Development

44. Towards a Profession  Beginning in fall ‘02, focus groups solicited feedback from CFP professionals  Revised draft document in January 2003  Over 30 CFP professionals involved in the creation of the revised draft The CFP Practice Standards - Development

45. Towards a Profession  Revised draft posted on web for comment in January 2003  Dozens of comments analyzed and synthesized into a new revised draft released in September 2003 The CFP Practice Standards - Development

46. Towards a Profession  Launch in October 2003  Comments considered until October 31, 2004  Final standards January 2005  Mandatory implementation April 1, 2005 The CFP Practice Standards - Development

47. Towards a Profession  New draft late July or early August  www.CFP-CA.ORG The CFP Practice Standards - Development

48. Towards a Profession  Comments received on: “Modular/Segmented” financial planning Non-financial-planning activities General applicability Nature of engagement letter Disclosure requirements Prescriptive versus principled nature of standards  New draft will reflect comments as appropriate The CFP Practice Standards - Comments

49. Towards a Profession  Professional Competency Analysis Project Re-evaluate the knowledge, skills and abilities required of CFP professionals Develop a new competency profile for CFP professionals Leads to a new test blueprint Sets the foundation for new pre-certification requirements Lays the groundwork for new CE requirements 4. Establishing Proficiency Standards

50. Towards a Profession  First time a “competent financial planning professional” is being defined  Competency be based on performance, not knowledge “It’s not about what you know, it’s about what you do””  Based on the clear definition of financial planning and on the Practice Standards Establishing new Proficiency Standards - Why?

51. Towards a Profession  Provide yet more clarity as to what a CFP professional does, and expectations for competent performance  Better relate the real world of financial planning to Education and Examination Competency Analysis - Anticipated benefits

52. Towards a Profession  Built on the following: Definition of financial planning Statements of competency for each of six financial planning components Statements of broad-based pervasive financial planning skills not unique to specific components Competency Analysis – Building Blocks

53. Towards a Profession  As well as: Statements of professional skills Specific knowledge required  Together, the competency statements, professional skills, and underlying knowledge form a complete Competency Profile for CFP professionals Competency Analysis – Building Blocks

54. Towards a Profession  Development began in June 2003  Independent Consultants  AAC  RWG Competency Analysis – Development

55. Towards a Profession  It all came together at AAC met in May 2004 to finalize the framework and the statements of competency  Now it’s the greater CFP community’s opportunity to participate Competency Analysis – Development

56. Towards a Profession  Two surveys released this week and last Competency Knowledge Competency Analysis – Next Steps

57. Towards a Profession  Once Competency Profile is validated New Test Blueprint New curriculum guidelines and requirements New CE guidelines and requirements Competency Analysis – What next?

58. Towards a Profession  The movement towards recognition of financial planning as a profession must continue if we are to meet the needs of the public  Four key initiatives by FPSC are helping to lead the way: Communication of a clear and concise definition of financial planning the Brand Ambassador program the CFP Practice Standards the CFP Competency Profile In summary

59. Towards a Profession  One thing is certain: Through these efforts, and the work of CFP professionals like you, financial planning will be recognized as a profession and the CFP as the mark of the financial planning professional in Canada In Summary

60. Towards a Profession  Thank You In Summary QUESTIONS?