The Financial Planning Association of Canada | E127
The Financial Planning Association of Canada | E127
In this episode of Financial Planning for Canadian Business Owners, Jason profiles the Institute of Advanced Financial Planners (IAFP) and its Registered Financial Planner (RFP) designation. Featuring an interview with Aaron Hector, President of the IAFP, they discuss the qualifications, ethical standards, and the importance of fiduciary responsibility associated with becoming an RFP. The conversation also highlights the support and resources the IAFP offers its members, including high-level forums and a premier conference on advanced planning. The episode aims to guide listeners on how to find qualified financial planners in Canada by emphasizing the significance of solid credentials, relevant experience, and organizational affiliations.
Full Transcript
FPCBO 127 - IAFP
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[00:00:00]
Jason Pereira: Hello and welcome to Financial Planning for Canadian Business Owners. So today on the show is not specifically about technicals. It is part of a three part, it is part of a three part series I am doing on basically where to find advice, uh, from qualified financial planners. And to do that, I am profiling three different organizations in Canada that basically financial planners either well basically have to participate with or.
Opt into in order to be financial planners. And today on the show I have Aaron Hector, the CEO, or sorry, the president of, uh, the Institute of Advanced Financial Planners. Now, full disclosure, I am a director of this organization as well, so I am intimately tied to it. I've spoken to many other conferences and, uh, yeah, I've been.
There for a long time and for a reason, and we're gonna talk about what that reason is when we talk to Aaron. So Aaron, thanks taking the time today.
Aaron Hector: Thanks for having me on Jason, uh, I'm looking forward to chat a bit about the IFP and the registered financial planner designation.
Jason Pereira: So that's an important point.
I'm gonna start there. So the IFP, tell us about the IFP and the RFP in [00:01:00] particular.
Aaron Hector: So the Institute of Advanced Financial Planners is really the governing body for the registered financial planner, uh, designation. So it'd be comparable, um, to what I think was probably more commonly known as fp Canada's relationship with the certified financial planning designation.
Jason Pereira: So one is a credentialing body, the I A FPS credentialing body. The credential is the registered financial planning des uh, uh, registered financial planner designation. Uh, but you know, we're also a membership body, right? Like when you become an RFP, you're also a member of the IFP. It's a bit of a difference, but let's talk about both of those.
I mean, let's talk about the RFP. You know, what is the RFP and why should Canadians be looking for advice care.
Aaron Hector: So the RFP is a financial planning designation in Canada. Um, the, so it. First of all, it, it's intended to be quite a high level, uh, designation for financial planners. Um, [00:02:00] the distinguishing factor, I think one of the main ones at least, would be that you have to be actually a practicing financial planner.
So it has to be your primary vocation. Uh, so throughout the year, that's your job. You're providing financial advice to Canadians and trying to help their problems. It can't be a side gig and you need to attest to this annually. Uh, also, I. You, you also have to have either A PFP or a CFP to apply to get your, uh, RFP.
Jason Pereira: So it is a, I'm not gonna say secondary, but it's an, it's an after the baseline financial planning designations that exist. It's after that that we would achieve what to achieve this. Okay. So let's talk about what it takes to become an RFP. So what is the qualification in order to become one?
Aaron Hector: So first of all, um, uh, as I already mentioned, we, we have said that you have to have your CFP or your PFP to apply.
Um, you need to have character references from other [00:03:00] seasoned financial planners in Canada, one of which is a is A RFP currently. Um, you need to basically. Be able to show that you have a level of expertise. So to do that, we have a technical exam, we have a ethics exam, and you need to submit a written financial plan, which then goes through our peer review process, which is fairly rigid, I would say, um, the, the past.
Level on the first submission is, is really quite low. Uh, some people have passed first try, but, but the numbers on that are, are quite low. And it's, uh, a way for us to, you know, make sure that, you know, we're not just giving the RFP designation out to anyone who applies. They really need to show that they're at a certain level.
Jason Pereira: Yeah. And you know, the, the failure rate is not an indication of lack of ability. It's somehow just, I think the, what's provided is a guideline for what we're [00:04:00] looking for is very, very comprehensive. And oftentimes that sort of planning is done not all in one meeting. It's done in several meetings or over the course of an engagement.
So what's usually different is the com, the need to compile all that work into one report. Right. Which. Oftentimes, you know, has to be repackaged. Things may get left out. Um, sometimes things are not hitting a certain standard, you know, it is what it is. But nevertheless, the point is, is that we're, we're basically testing you on your ability to do the actual work, not just pass an exam.
Aaron Hector: That's right. Yeah. And, and I think for prospective RFPs, it's a good process to go through because you get some feedback and you know, it really helps you to elevate maybe what you're currently doing and, and. What you're currently presenting to clients.
Jason Pereira: I would agree with that. I mean, one of the experiences I had that really kind of helped me elevate my planning was, uh, was actually not just the RFP, but also the financial planning awards when they were around the fact that I was getting back my work with critical review.
[00:05:00] I mean, how often do we get the opportunity to get a bunch of, you know, top level planners, review your work and actually say, Hey, you need to. Change this or you left this out, or, I mean, that's, and again, I don't wanna scare clients off by saying that, you know, these people are doing the wrong job. Not at all.
Oftentimes it is the right job. It's just, there's other things we can always consider. There's other ways we can explain things. There's other ways we can demonstrate things. There's other aspects of the financial world that can be brought into the conversation that sometimes are left out.
Aaron Hector: Yeah. You know, I kind of parallel it to someone who goes out and applies for life insurance.
You know, if you have to go through a medical at that time, that's, that's kind of a nice ancillary benefit of applying for insurance is you, you, you get an assessment of your health at that moment in time as well. You,
Jason Pereira: you laugh. It's hilarious. 'cause all the guarantee standard issue, people, companies out there have done everything they can to make everybody terrified of medicals.
I don't go through a medical, it's like, wait a sec, like. First, you do wanna go through a medical, because like either A, you're perfectly fine and you're getting endorsement or you're discovering something, and if you discover something, [00:06:00] that might be the early discovery that saves you from that thing.
Aaron Hector: That's right,
Jason Pereira: right? That's an extreme of course, but it is what it is. Okay, so in addition to that, there's also an exam, right?
Aaron Hector: Yep. Yep. Technical exam. That's correct. Um, so that, you know, technical exam would be just to verify that you have the technical skills to, you know, know what you're talking about.
And then there's also an ethics exam, which, you know, we, we wanna make sure that those who hold an RFP or um. Highly ethical, uh, financial planners. And so part of that process is guiding people along through, you know, our, our ethics standards, uh, of our organization, and making sure that they understand what we stand for before the, before we're signing them up.
Jason Pereira: Absolutely. Okay. So that's what it means to become an RFP. It's basically, you've done all this. You've literally, I mean, peer reviewed, you're literally having your work peer reviewed, advised upon, iterated upon, but. Nevertheless, you're, you're basically being bestowed this upon [00:07:00] you by other qualified professionals who do the work.
Okay. So that's the, that's the RFP. Let's talk about the IFP and how it supports RFPs in their mission.
Aaron Hector: Uh, so there is, first of all, an ongoing discussion forum that members are, are allowed to participate into. Um, and because the, the level of the. RFP is quite high. The people who participate in the forum are also very well established in their careers and have a lot to offer each other.
So, you know, just kind of going back over the last couple months, I was curious at, you know, what kind of conversation's gone on in the forum and, you know, lots of, um, referrals to. Respected third party people. Like, you know, I need an accountant for a client in this kind of area in the city of Victoria.
Can you help me? Or, you know, I need a, I need help [00:08:00] thinking through something with RCAs. So, retirement compensation arrangements, or can you help me figure out how to best model, uh, IPP using the planning software? You know, these, these are the kinds of discussions that are going on. Um. And so, you know, that those are just some, some of the recent ones that I'm seeing on the forum here.
But, um, you know, the capital gains inclusion rate change was discussed at length this year as well. Um, you know, depending on the, what's going on in the industry or what's going on in the marketplace in Canada, there's, there's going to be discussion going on about that. And you get this kind of well-rounded, um, membership that's.
Happy to, happy to help each other out. It's, it is really a very collaborative environment, I would say.
Jason Pereira: Yep. And I would say, you know, participating in both that form and several other forms in this country and other countries, what I will say is that we're not asking basic questions there, we're asking questions that are very [00:09:00] difficult, quite honestly to answer. Mm-hmm. Or, or very specialized. And the answers that come back come back from people who literally have walked that path before and know it at a very high level. So I would say it's, it's not a quantity form, it is definitely quality form.
If you have a really technical question, odds are you gonna get a really technical answer.
Aaron Hector: Yep. Yeah, I would agree.
Jason Pereira: So that's, so that's the IFP out support. So we also support it through, I think, what I would call probably the, the Premier Conference for advanced planning in the country. Uh, there's other conferences I don't wanna take away from.
I mean, there's that, that are great. Um, but at the same time, I think we do a pretty good job of covering off some pretty sophisticated stuff when it comes to taxation and practice management in other areas.
Aaron Hector: That's right. Yeah. So it's, it's our symposium and it's typically held in the fall. So the last couple years, it's been sort of in late September, uh, this upcoming year again, will be at the end of September for 2025.
Um, the one thing that I. Is also a little different now, is that it's, it's in person. You know, the, there are not many [00:10:00] opportunities to attend conferences for financial planning in person in Canada at a high level. Mm-hmm. Um, but if you can't attend it in person, um, it is offered on a hybrid basis so you can, you can also attend virtually.
So, um, you know, kind of whichever way you're able to make it work, um, there's an option for you.
Jason Pereira: Excellent. Okay. So we've talked a lot about basically the organization in general, uh, but let's talk about the benefits of working with an RFP. So again, we're not trying to take away from any other organization here that's credible.
There's plenty of credible organizations, plenty of other credible options, but the, you know, what differentiates the RFP professional?
Aaron Hector: Yeah. So first of all, just. Verifying. I, I think that the person, it is their primary vocation. This is important. It's not that someone is doing some kind of ad hoc planning on the side or anything like that.
They need to attest that it's their, what they're doing day in, day out, um, the fact that they've passed their [00:11:00] submissions, I think. Confirms that this person has some chops, right. That, that you're dealing with. Mm-hmm. Um, also, you know, the, the ethical standards that we require, I think are, are quite high.
And we are actually in the process currently of elevating that, uh, further. So we're introducing a fiduciary standard. To our membership. Um, it's not in place yet and we're, we're doing work on it. So I can't speak a whole lot about the specifics to that because we're in, in the process of, of getting the work done.
We've got a focus group that we we're, um, that we're participating in currently. Um, but, you know, we're moving in that direction and we're really pleased to be continuing to elevate the, you know, we're trying to elevate the profession in Canada essentially.
Jason Pereira: Excellent. So, uh, we'll get back to the fiduciary responsibility in a second, but I wanna talk a little bit about, um, a little bit about, uh, the comment about it being a primary thing that.
The planners do. I mean, I think what average the average advisor or the average consumer might not [00:12:00] realize is that an advisor can absolutely get a designation, but that designation doesn't necessarily tie to the work being done. So they could go out and get another designation in financial planning and then basically just focus on nothing but investments for the rest of their career.
Nothing but insurance for the rest of their career do just, just product sales, not actually do any actual real planning as opposed to actually being able to produce a actual financial plan, which is a skill set in its own.
Aaron Hector: That's right. That's right. And you know, with some, uh, designations, as long as you're doing your CE credits at all, it takes to, to basically re renew every year.
Whereas on our side, we do have 30 hours of CE credit requirements annually, but then you, you have to attest each and every single year that it's still your primary um, location.
Jason Pereira: I think, frankly, you know. To get to the level where you'd actually get through the exam and qualify for it. Frankly, uh, you know, if you stop doing that, it would be, I, I, I think it's pretty low probability, right?
You're not gonna, not gonna get to that level and just be like, okay, I got the RFP, [00:13:00] I'm going to walk away and just, you know, take my, take my credential and not do this work anymore. So, um, so you have, you have someone who's skilled at those technicals, which is great. Now let's go back to the fiduciary responsibility.
So that was a. I mean, you know, softball question here, 'cause I've long been an advocate of this and written about it publicly, but let's talk about why that's important and why the, the what? The decision to basically make that change, where that came from.
Aaron Hector: Yeah. So, you know, this is something I think that I.
In the Canadian landscape. It's been missing for a long time. Um, and you look around at the marketplace and you know, so in the us uh, the CFPs there had to adopt a fiduciary standard. Um, it's quite a few years ago now, but, um, don't quote me on, I mean, 19 ish I think. Yeah, I was thinking 2019. Um, and more recently here in Canada, FPAC came in and they have fiduciary pledge, which, um.
I [00:14:00] think that you can see the success of that initiative just based off of membership growth. And, um, our organization, our organization, um, was looking at it and said, we want to help to further the profession, you know, and, and the, um. The, the credibility and the professionalism of financial planning advice in Canada.
And we felt like this was an important initiative to undertake. So, um, really it's about protecting consumers and if we can be an organization that is willing to kind of up our. Standards to, to do. So we're very happy to do it, but it, I mean, it doesn't just happen overnight, right? So there are lots of different considerations that you need to make, uh, as an organization as you're doing this.
And that's kind of the work that we're currently undertaking right now. So it's not in, not in place currently, but we're moving in that direction. Um, with the goal for 2026 renewals.
Jason Pereira: [00:15:00] Fantastic. Well, I look forward to attesting to that anyway. Likewise. Yeah, absolutely. And frankly, I mean, I can get on my soapbox here and and say all the time, at the end of the day, if we can't be held to the highest standard of basically dealing with our clients and putting their needs ahead of our own, then frankly, you know, frankly, we shouldn't be in this business.
This business shouldn't exist in, in my opinion. And, and frankly, you know, if you were to pull the average person on the street, do you think your financial planner is legally held to a standard that. Basically they have to put you first at all times. The answer is gonna be hopefully like, I think so, or I should hope so.
Like
Aaron Hector: I think most clients would incorrectly assume that that standard is already in place.
Jason Pereira: Agreed. Agreed. So, uh, let's talk about, uh, basically some tips for. How to look for a financial planner. So basically someone's looking for, for advice, looking for planning, uh, services. What are your kind of tips for how to basically go about selecting the right planner?[00:16:00]
Aaron Hector: Uh, sure. So I mean, first of all, you wanna be working with someone that has a solid credential. And, and I absolutely think that the CFP is a very high level, uh, financial planning designation. I think that the RFP is another very high level financial planning designation. I don't think you could go wrong with either of those.
Um, I think membership in affiliations like fpac, really all three of the organizations that you're profiling in your series, Jason, they look for people who are part of those organizations. Um, because you want to have, uh, a person who is taking their career seriously. And I think if you're a member of, of.
Cf, you know, if, if you have your CFP, have your RFP member of Fpac that. Alone, I think shows a prospective client that you're taking yourself seriously as a financial planner, you're at a [00:17:00] high level of aptitude in in what you do, and you're looking to collaborate with other financial planners who could help you if you don't have all the answers at that time like that, that collaborative.
Part of being part of, um, you know, I would say Fpac does this really well and our organization with our membership forum does this really well also. Um, the, the fact of the matter is that the subject matter with financial planning is extremely broad. You know, you can get questions about. Any one of like a thousand different, um, micro topics and if you just haven't had the experience in your career as a planner yet to, to come across that you need to have a network that you can go to, to ask for support and it, you know, um, I, I'd be the first to admit that I haven't come across everything that I could come across.
And I've been in the industry for, you know, closing in on 20 years now. Um. I'm still going out to my network through forums [00:18:00] or, or friends who are in the industry to ask them for their take on different, uh, situations frequently. So. You know, these, these organizations have, um, searchable member directories.
So you can, like, for the RFP, you can go right on our website, go find a planner, look for the city that you're in. I mean, if you want to work with someone, it don't
Jason Pereira: limit yourself to postal code. That's unfortunate. Most people do, but it's, uh, you know, but still is not geographically bound.
Aaron Hector: There are, there are searchable directories there.
Um, mm-hmm. And, and, you know, remote access is. Becoming more and more common these days too, where you maybe don't have to physically be in the same city either. Um, but looking for someone that has, you know, a higher level financial planning designation and part of the right organizations, um, I think that would be a really good starting point to connecting with someone that you should be able to trust.
Jason Pereira: Absolutely. And I think, uh, expanding a couple things, [00:19:00] you know, you kind of touched upon it, is that, you know, we can't. See everything. I mean, unfortunately this industry often too, well, especially when running their business, you know, we educate people broadly, which is great because you should have a broad knowledge.
But in actuality, the only way you get to know the nuances of a client situation is by honing in on specific cases. Right? So we can't be all things to all people. We can be a lot of things to a few people. So I think I'm gonna add into your saying like find someone who's very used to dealing with people in your situation.
Right. You know? Good point. If you're, if you're, you know, people will always say the same thing. I, you know, deal with high net worth families, executives, and business owners. Well, that's, those aren't niches. Those are anyone with money. So let's talk about your specific needs and what a specific history or examples that you have of dealing with people in that situation.
I think that that is incredibly vital.
Aaron Hector: That's right. You know, like if, if you have a business, not all financial planners are comfortable giving advice to business owners. If you are an executive who [00:20:00] have. You know, RSU or PSU type forms of, of compensation. Not all planners will have experience working with that as well.
Um, you know, we, we have friends who have, um, carved out niche, niche, um, areas of practice that they really focus on. Um, thinking of Arvind, our friend who has created a niche around serving midwives. Mm-hmm. So, you know, everything that, uh, if you're a midwife, um. He would be fantastic because he's created a practice to serve that, uh, demographic.
So mm-hmm. Those are the kinds of things where you can really kind of tune into a planner who is very familiar with your situation.
Jason Pereira: Absolutely. And people think, you know, there are, while those people situations are, there's a lot of general, general challenges. The specific challenges are amazing. So, I mean, vin's even written, uh, articles on the impact of, um, of menopause and, and the midwife's ability to work something that would never cross my [00:21:00] mind.
I met other planners, you know, one particular who becomes the mind, who specifically deals and. Who works, uh, specializes in dealing with real estate agents and in Ontario with their new incorporation status, which many of them, you know, set up and, and given no thought on how to properly manage those things and the liabilities within.
So, you know, there's a lot of special, you know, no one is a fully unique snowflake every time in planning, but a lot of snowflakes looks similar to other snowflakes in different categories. So the reality is, is that if you can find someone who's got experience in dealing with that specific problem and can speak to it.
Top of mind and, and dress, you know, you sit in the room with them and, and they're already telling you about things that you, you sit back and go, my God, you get what I'm saying? You get where I'm coming from. That's the kind of reaction you hopefully wanna have.
Aaron Hector: That's right. Like I, I look at it here in Calgary.
Um, I, I just naturally have quite a few clients that work for Canadian Natural Resources and, um. It's, it's nice whenever I work with a prospect from that company because I know exactly what their compensation, [00:22:00] uh, metrics are. And there there's a lot. Yeah. And they typically, because there's a lot of share-based, um, vestings without tax being withheld at that source, there's, there's always tax issues and tax installments and people are trying to figure out how does it all work?
And I can take their, so, um, it's not solely anymore share work statement. Mm-hmm. And, um, kind of. Follow or lead them through exactly where the tax events are gonna happen, because I've seen it so many times. Um, that's just one example. Yeah. But, you know, uh, right off the bat, I can sit in front of someone who I have never met before, and I probably know more about their compensation structure than they do.
And what a, what a great, you know, way to connect with a financial professional if you can connect with someone who, um, who already understands your situation.
Jason Pereira: That's it. Exactly. It's that kind of, that kind of personality, not personality, but skill match that you're gonna look for ideally. Okay. So basically before we wrap up, I guess just to give you one last final pitch [00:23:00] on why to deal with an RFP and why the IFP is, uh, is a place to looking for advice.
Aaron Hector: Um, so I would say you just know that you're dealing with someone who has expert the experience that they would require to. Hold their RFP to actually get it in the first place. Um, they're part of a community that is very willing to help each other and, um, it's their primary vocation. So, and, and, and they're holding themselves to a high ethical standard as well.
Let's say if you were to sum it up, that would be a great way to do it.
Jason Pereira: Excellent. Aaron, thank you for taking the time. And of course, all the work that you, and I'm including myself in the circle here. Everyone at the IFP does, I mean, what can I say? I can't just pat the IFP in the back without taking some credit.
Um, uh, and basically, and, uh, trying to help elevate the standards.
Aaron Hector: Thanks, Jason. Appreciate you having me on.
Jason Pereira: Thanks. So that was today's episode of financial Planning for Canadian Business Owners. Again, a little bit different than anyone looking for advice. I wanna be able to point here and say, three [00:24:00] organizations you can trust and look into and find people who work with them, or at least certified by them or they're members of, and basically, at least that's a giving you a higher probability of success in my mind.
So as always, if you enjoyed this podcast, please review on Apple Podcast, Spotify, SoundCloud, or your podcast including YouTube now. And uh, until next time, take care.