FAQ: Financial Planning
Financial planning is a process that determines how you can best meet your life goals through the proper management of your financial affairs.
Key to effective financial planning is the ability to take into account all relevant aspects of your financial situation, and to identify and analyze the interrelationships among sometimes conflicting objectives. It is this unique integration of knowledge and skills across a broad range of topics that distinguishes professional financial planning from other related financial advice.
The letters “CFP” stand for Certified Financial Planner. The CFP marks identify individuals who are dedicated to the highest level of professionalism in providing financial planning advice. The CFP credential assures that the planner adheres to internationally recognized professional standards of competence and ethical practice as set in Canada by the not-for-profit Financial Planners Standards Council (FPSC). CFP standards include requirements in education, examination, experience and ethics – commonly known as the 4Es of professionalism.
Most provinces do not regulate the use of the term “financial planner.” CFP® certification is your assurance that your planner has completed a rigorous course of study approved by FPSC, passed the only independently developed national comprehensive examination for financial planning, and is committed to ongoing professional development and adherence to the professional CFP® Code of Ethics and CFP® Financial Planning Practice Standards developed and enforced by FPSC.
Most provinces do not regulate the use of the term “financial planner.” CFP certification is your assurance that your planner has completed a rigorous course of study approved by FPSC, passed the only independently developed national comprehensive examination (the CFP Examination) for financial planning, and is committed to ongoing professional development and adherence to the professional CFP Code of Ethics and CFP Financial Planning Practice Standards developed and enforced by FPSC.
CFP professionals follow a professional code of ethics and practice standards described in detail in the brochure entitled: “What assurance do I have that financial planning works for me?”
The CFP Code of Ethics requires each CFP professional to adhere to ethical and behavioural principles that ensure the client’s best interests are always placed first.
The CFP Financial Planning Practice Standards describe what should happen during the financial planning process, providing guidance on how the CFP Code of Ethics is practically applied in every financial planning situation each step of the way.
FPSC will respond to alleged violations of the CFP Code of Ethics brought to its attention in writing. If a CFP professional fails to meet the high standards of the CFP Code of Ethics, FPSC will take appropriate disciplinary action. The most severe of these actions is the revocation of the licence to use the CFP marks.
Look for the distinctive CFP certification marks: CFP flame logo, and the initials CFP or the words Certified Financial Planner. Only FPSC can authorize an individual to use these three marks in Canada. You can also check the CFP professionals Directory on this website or call FPSC at 416.593.8587 or 1.800.305.9886 to verify a planner’s status as a CFP professional.
Historically, there were distinct divisions in the services offered by the various industry players. You saved your money or got a loan from a bank. You purchased stocks and bonds from a broker. You bought insurance from an insurance agent. And you bought mutual funds from a mutual funds sale rep. But the traditional "4 pillars" of the financial services industry have blurred. Players from every sector are pushing into one another's turf. And what we are seeing is the one-stop shop - a convergence so to speak, where most of your financial services and products can be obtained through most financial institutions.
Financial planning as a distinct profession began to take shape in the late 1970s. While giving financial advice was not a new thing, it had become synonymous with the sale of products. As the general public began to show a lack of faith in public pension funds and baby boomers got older and had more disposable income, financial planning type advice was increasingly sought. Boomers began to ask financial planning type questions of their "product" advisors - questions few "advisors" were capable of answering. The traditional pillars dictated the services provided were done piecemeal. Financial planning, using all financial factors like insurance, retirement planning, estate planning, education planning, to name a few, was not available.
At present, there are between 50,000 and 60,000 individuals in Canada who offer financial advice and/or sell financial products. Of these, over 17,500 are CFP professionals and more than 14,000 are currently working toward CFP certification. It has been estimated that 80 per cent of those who hold themselves out as financial planners hold the CFP credential. The profession is still relatively young and market saturation has yet to occur. The results of our Quality of Work-Life Survey show that more than one-third of planners are over the age of 50 so there is, and will be, room for more financial planners.
are certification marks 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.
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