Taking Action Whom do I contact? Investment specialists: who does what?

This section was prepared in cooperation with Jacob Securities

Currently there are a wide variety of designations, certifications and registration categories for individuals providing personal financial services. People tend to be a little naïve in the face of the complex world of financial services and may miss out on opportunities to secure the best services for their individual needs. Knowing a financial professionalʼs registrations and qualifications can also help you identify what is in your best interest and what is in theirs.

There are four main areas of financial services designed to meet the financial needs of individuals:

1. Financial Planning
2. Investments
3. Insurance
4. Other – Accounting, credit counselling, financial coaching, etc.

Financial planning

Financial planners help you manage your finances by drawing up an action plan consistent with your individual goals and constraints, and tailored to your individual needs. Their involvement extends across a broad spectrum of interests and includes financial management, insurance and risk management, investment planning, retirement planning, tax planning, estate planning as well as the legalities relating to each of the foregoing.

In Québec, financial planning is regulated by a governmental body but such is not the case in the rest of Canada where anyone can call themselves a financial planner, regardless of training or experience. Québec-based financial planners must register with Autorité des marchés financiers (AMF), unless oversight is exercised through another professional body.*

A number of different organizations administer financial planning designations. If an individual enjoys organizational certification, one can normally verify the individualʼs status, review the individualʼs activities and submit complaints through the certification administrator. To learn more about the various certifications, use the Understanding Financial Certifications tool of the Investment Industry Regulatory Organization of Canada (IIROC).

Financial planners cannot provide investment advice or sell securities and insurance without also being registered with the appropriate regulators.

* Ordre professionnel des administrateurs agréés du Québec, Ordre professionnel des comptables agréés du Québec, Ordre professionnel des comptables généraux accrédités du Québec and Chambre des notaires du Québec. These professional bodies have agreements with the AMF and members can represent themselves as financial planners if they meet the governing terms and conditions set out by Institut québécois de planification financière (IQPF).

Investments

Anyone selling securities or offering investment advice in Canada must be registered with the securities regulator in each of the provinces and territories in which they operate. The customer service representative (formerly ʻtellerʼ) at your local financial institution is today poised to assist you with banking services such as choosing a bank account or credit card, comparing loan and mortgage products, or proffering advice on short term investment products such as bonds and guaranteed investment certificates (GICs).

{It is important to note that investment advice must include ʻproviding an opinion on the wisdom, value or desirability of investing in specific securitiesʼ (OSC)
If someone provides information without offering advice on a specific security or an opinion on categories of securities, he or she is not required to be registered.}

There are two types of registration to sell securities in Canada:
1. Mutual Fund Dealers Association (MFDA)
2. Investment Industry Regulatory Organization of Canada (IIROC)

Mutual fund salespersons are registered with MFDA. They work out of financial institutions (banks, credit unions, etc.), investment companies and insurance companies (provided that they hold a dual licence for investment and insurance). These individuals have extensive training in investment and retirement strategies but only sell mutual funds.

{Some mutual funds salespersons will offer products similar to exchange traded funds (ETFs) if only because they are not qualified to sell real ETFs. These products are generally ETFs in a mutual fund wrapper with higher fees than the underlying mutual fund. Make certain to ask your representative if what you are buying is an ETF or an ETF mutual fund.}

Investment representatives (sometimes referred to as stockbrokers) must be licensed with an IIROC member dealership. Dealerships can be part of a major institution such as a bank or they can operate independently. Investment representatives are trained and authorized to provide a vast selection of investments including stocks, bonds and mutual funds. Some investment representatives and their firms offer advice and a full range of services such as market analyses, securities research and portfolio management. Others act more like intermediaries, selling or buying securities based on the customerʼs instructions but without proffering advice (discount brokerage). There are also investment representatives who offer exclusive products authorized by the company that they represent, while independents provide a full complement of products.

Financial representatives may also hold other certifications indicative of various areas of specialization. To better understand financial certifications and designations commonly used within the Canadian financial services industry, consult the Glossary of Financial Certifications published by the Investment Industry Regulatory Organization of Canada (IIROC). Financial certifications and designations are not the same as registrations and licences. An adviser may use various financial certifications and designations whether or not he or she is registered or licensed with a regulatory body. Hence it is important to check with your provincial securities commission or IIROC to make certain that your financial advisor is registered or licensed to advise you.

{When a mutual fund salesperson or investment representative works for an institution which offers proprietary products, they may receive superior incentives to sell these products over non-proprietary comparables. This may lead an investment professional to favour incentives over a customerʼs best interests}

Insurance

There are two categories of individuals in the insurance business.

An insurance agent is a salesperson for one or more insurance companies. His or her responsibility with respect to you, the customer, is strictly administrative.

An insurance broker must be more fully qualified and can sell customers products from a variety of insurance companies. His or her responsibility to make the best decision for you, the customer.

In Canada, you can purchase insurance a) directly from an insurance company; b) from an agent who represents only one insurer and can only offer that companyʼs products; c) on the Internet; through a group company or association purchase or d) through an insurance broker who can offer a choice of coverage from various insurance companies. (Source: http://www.ibac.ca/Why-Use-A- Broker/Overview.aspx)

Insurance professionals are highly trained and qualified experts in personal insurance products. They offer advice and products such as life assurance, disability insurance, critical illness insurance, long term care insurance, accident insurance, mortgage insurance, and extended health care benefits. For more information about the various types of personal insurance and general investor education advice, check out the Investor Education website operated by the Ontario Securities Commission.

If an insurance agent has no other registration, he or she may nonetheless offer limited investment products such as segregated funds (a form of mutual fund with additional guarantees offered exclusively through insurance companies). There are a handful of responsible investment segregated funds in Canada. Ask your agent or broker about them.

Other

There are several other types of financial services that you may require at various points or stages in your life. An accountant or bookkeeper can help you with tax preparation, tax planning or the running of a small business. A financial coach employs a more hands on approach to financial planning. He or she is akin to a personal trainer devoted to honing your money skills. A credit counsellor can help you manage debt and improve your credit score but beware! Anyone can call themselves a credit counsellor. Make certain that your credit counsellor is registered with an association and that it is possible to verify his or her status and review his or her history of customer appreciation/complaints.

Fees

Advisers can be paid a salary, commission, fee or combination of the three. If an adviser is paid a salary, the cost of advice is built into the products that you buy. Many advisers are also paid a commission on every product they sell. Other advisers charge a flat fee based on an hourly rate or a percentage of the assets in your account.

Conclusion

Unless they hold one of the above-mentioned designations, accountants, lawyers, brothers-in-law and Ethiquette are not qualified to provide investment advice. Additionally, owing to the restrictions applying to certain registrations, you may not be receiving the full range of choices needed to meet your investment goals. A mutual fund salesperson can only sell you mutual funds, and may therefore not be able to advise you about other investment products that might more properly concur with your profile and objectives. An investment representative may not raise the importance of insurance. Responsible investment is not just about good environmental and social practice, it is also about applying best practices to traditional money management.

To locate the adviser best poised to meet your individual needs, consult Ethiquetteʼs listing of advisers knowledgeable about responsible investment.

Additional investment specialist resources

CBC article on hiring an adviser
http://www.cbc.ca/news/business/taxes/5-things-to-check-when-hiring-a-financial-adviser-1.1166888
IIROC: Understanding Financial Certifications
http://www.iiroc.ca/investors/UnderstandFinCert/Pages/default.aspx
OSC: GetSmarterAboutMoney.ca
http://www.getsmarteraboutmoney.ca/en/Pages/default.aspx#.U9LLJ_ldUoM

Click here (insérer ici liste PDF ou lien vers Boîte à outils) for Ethioquetteʼs listing of seasoned RI advisers.