NOVEMBER 2012

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MulticulturalismOpportunity or Challenge?

FPSC’s enforcement process explained

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Navigating Canada’s multicultural landscape as a financial planner

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Financial Planning: An international perspective

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IDEAS, THOUGHTS AND TRENDS FOR TODAY’S CFP® PROFESSIONAL

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BytheNumbersMulticulturalism has always been a core component of the collective Canadian identity. Immigration in Canada continues to heavily influence our demographics. According to Statistics Canada, there is an average of one person immigrating to Canada every two minutes. With immigration continuing to be a factor of population growth, there are opportunities for financial planners in Canada to better serve these multicultural markets while connecting with a diverse network of clientele. For more insight on multiculturalism, read “Working and Connecting in a Culturally Diverse World” on page 7.

Financial Planning Standards Council (FPSC®)902-375 University Avenue, Toronto, ON M5G 2J5 Telephone: 416 593 8587 Toll Free: 1 800 305 9886 Email: inform@fpsc.ca Website: www.fpsc.ca

Editor-in-Chief ........................................................................................................................ Tamara Smith

Contributors ................................. Daniel Ongaro, Jay Cameron, Lisa Shedden, Winna Tse

Creative Director ................................................................................................................ Solange Rivard

The FP Standard is published twice annually by Financial Planning Standards Council (FPSC®).

3%10% 63% of newcomers are classified

as economic immigrants (skilled workers).

of Canada’s population reported a Chinese language, including Mandarin and Cantonese, as their mother tongue.

6,452,305600+

2/3of elementary and secondary students are foreign born.

immigrants live in Canada (19% of Canada’s population of 33.5 million).

of the population increase in Canada since 2006 is the result of immigration.

newcomers per day have arrived in Canada since 2006.

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Cary’s inbox

FPW, FLM and You

Discussing the issues that cross the desk of FPSC’s President and CEO

You may have noticed that FPSC’s annual Financial Planning Week (FPW) found a new month to call home as this year’s FPW takes place during the second annual Financial Literacy Month (FLM). Moving FPW to coincide within FLM made a lot of sense as we consider the two intrinsically linked and natural extensions of our vision to see Canadians improve their lives by engaging in financial planning.

We believe that the lives of every Canadian would be improved if they engaged in financial planning, and the empirical evidence supports this. Our landmark Value of Financial Planning study has provided statistical evidence of the numerous benefits of engaging in financial planning. Individuals who have a financial plan report that they feel better emotionally, are better off financially, and are overall more content with their life than those without a plan. The gap between those who are working with a CFP® professional and a non-certified financial planner is also significant.

However, we recognize that many Canadians will not seek out or realize the benefits of financial planning until they have an improved level of financial literacy. Along with other organizations, we continue to champion the need to create this foundation.

Such a foundation will not be created

so much by the organizations that champion financial literacy, but by the efforts of individuals who actively seek ways to increase the financial literacy of others. By the conclusion of FPSC’s fourth annual FPW, there will have been over 100 individual events hosted by CFP professionals to educate Canadians in communities across the country (see page 11 for highlights of this year’s Challenge winners). These events have focused on everything from basic financial matters such as how to build a budget or set up a retirement savings account, to the importance and benefits of financial planning. Events also focused on “hiring literacy,” to ensure individuals seeking financial advice know how to identify competent and ethical planners who put the interests of the client ahead of their own.

These events and other efforts outside FPW by individual CFP professionals reach Canadians in ways FPSC and other organizations could not achieve alone. It is these individuals, championing the cause of financial literacy by sharing their knowledge, skills and expertise with those in their own communities, who will leave a lasting impact on the lives of others.

For those who have not previously been proactive in helping build the financial literacy of others in their community, I ask that over the next year you consider making at least

one attempt to volunteer your time and expertise to those who may not ordinarily seek out your services.

It does not take a lot of time or effort to make a measurable and meaningful difference in the lives of other Canadians. Whether it is spending half a day in a classroom aiding teachers in the delivery of financial literacy education, explaining to new Canadians how to set up a bank account, or volunteering your expertise to needy Canadians, there are ample opportunities to make a difference in the lives of others and become a financial literacy champion.

While FPSC continues to seek ways to collaborate with government and other organizations that seek to increase the financial literacy of Canadians, it is the actions of individuals in communities across Canada that will allow us to meet our collective financial literacy challenge.

Are you making a difference in your community? Want to see Cary write about a particular subject? Let us know at fpstandard@fpsc.ca subject line “Cary’s inbox”

Cary List, CA, CFP®, is president and CEO of FPSC. Cary oversees CFP certification and has spent most of the past decade elevating the standards of the designation and working for recognition of financial planning as a distinct profession.

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Engaging Canadians in Financial Planning: What’s Holding Canadians Back?You have two slips of paper, each with pictures of a piece of chocolate cake and an apple. On the first slip you must circle which of the two you want to eat right now, and on the second slip, which you want to eat next week. If you are like most people, you circled the cake to eat now and the fruit to eat next week. Why?

Understanding human psychology unlocks the secrets to why we do the things we do, and may help you recognize why your clients may not always act in their own best interest. According to Dilip Soman, a Professor of Behavioural Economics at the University of Toronto, and presenter at FPSC’s fourth annual Financial Planning Vision 2020 Symposium on November 20, many Canadians are reluctant to practise good financial habits because, quite simply,

“Consumption is more sexy than savings.”

“It’s exciting to buy, it’s exciting to eat, it’s exciting to watch movies. It is not as exciting to buy insurance or balance your cheque book or education account,” explains Soman.

He believes our senses control much of what we do and how we spend our money, saying things we can touch, taste and smell drive decision making.

“I know I shouldn’t be eating this fancy dessert and instead putting the ten bucks away in my retirement account,” he offers by way of explanation, “but if I’m walking past a cake shop and I can smell the darn thing, I’m going to take it.”

Other behavioural concepts that may be holding clients back are a little less obvious. For example, when offered two similar rewards, humans show a preference for the one that arrives sooner rather than later, and often discount the value of the later reward, depending on the length of the delay.

Also, Soman says, “Things look very rosy in the future because we tend to think about the same act differently in terms of when it is going to happen.” To illustrate the point, he asked a group to write down what it means to construct a retirement savings plan in the future.

“People say I am securing my future and making sure my children are protected,” Soman explains. “But if you tell people they are to work on this tomorrow, they will say [they are], ‘Doing research in terms of which is the best investment, calling an advisor or opening a bank account.’”

Because long-term activities require more cognitive resources, Soman suggests we often put off doing such things, believing we will have more time to do them tomorrow.

He also believes that the lack of adequate financial literacy may be holding back some Canadians. “When you decide to say no to the chocolate cake, what are you going to do with the ten bucks? It’s one thing to just stash it away in the bank but I think long-term financial well-being requires more expertise.”

Even so, Soman admits, “People who don’t save as much as they should know they don’t save as much as they should.”

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Personal Connection Is Key to Reaching the UnderservedFinancial Planning Standards Council’s vision is to see Canadians improve their lives by engaging in financial planning. Yet the perception among the public remains that financial planning and financial advice benefits only the rich, and many Canadians—particularly young adults, women, seniors and visible minorities—do not seek out financial planning advice or are overlooked by financial planners.

This perception has been largely disproven. According to studies, including FPSC’s Value of Financial Planning study and Professor Claude Montmarquette and Nathalie Viennot-Briot of Cirano Research’s study, Econometric Models on the Value of Advice of a Financial Advisor, the added value of financial planning and financial advice cuts across all demographics including age, gender, and level of education or even occupation.

In the last few years more financial planners have begun to reach out to these underserved markets where individuals may not ordinarily actively seek out financial advice. Some financial planners, including Heather Holjevac, a CFP® professional, and FELLOW OF FPSCTM recipient, have built their financial planning business around addressing the needs of these sometimes-overlooked individuals.

“A lot of planners that have a specialized niche of clients do it not only as a purpose for their business, but also

“ A lot of planners that have a specialized niche of clients do it not only as a purpose for their business, but also as their passion.” Heather Holjevac, CFP®

as their passion,” says Holjevac, whose practice focuses on working with women, divorcees, caregivers and seniors to help them achieve clarity and confidence with their finances.

Holjevac’s passion for serving her clientele has been shaped and largely influenced by her own experiences.

“I’ve faced my own challenges; so have other members of my family, close friends and relatives. I see it as an opportunity to use my own skills and knowledge to help women I feel a genuine connection with. Helping them through their tough times and to see their success is very rewarding work for me.”

But there are unique challenges in reaching these markets. “You have to be able to connect with your audience. If you can’t understand where they are coming from because you have no shared or similar experience it is difficult to grow the relationship and build the trust you need to see your clients succeed,” says Holjevac.

Holjevac believes there are other financial planners like her, trying to reach out to a different demographic

of clients, but believes many become frustrated with the limited immediate results of their efforts. “The demographic I work with are usually individuals who are in a very vulnerable position and experiencing life changes such as taking care of a parent, or a recent divorce. Decisions about planning or investments are not made immediately but after a six-to-twelve-month window and only after providing them with a lot of added value.”

But there is a similarity among all demographics when it comes to their financial planning needs. “There are a lot of emotions, and when they are compounded with money issues, the biggest thing people are looking for is someone that they can trust.”

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FPSC’s Enforcement Process A Commitment to Fair and Equitable TreatmentIn June 2011, John Doe*, CFP®, found himself in front of a Hearing Panel adjudicating his alleged breach of the CFP® Code of Ethics. Financial Planning Standards Council (FPSC®) does not take such matters lightly.

“We need to ensure that FPSC has processes in place to ensure that any alleged misconducts by CFP professionals that we become aware of are thoroughly investigated and that the process is fair to both the public and the CFP professional,” says Stephen Rotstein, VP, Policy & Enforcement & General Counsel at FPSC.

The Disciplinary Rules and Procedures (DRP) detail the process used by FPSC to enforce the FPSC® Standards of Professional Responsibility for CFP® Professionals and FPSC© Registered Candidates and to otherwise fulfill its public mandate and protect the reputation of the CFP marks. The DRP outlines the procedures for FPSC’s investigation of a complaint against a CFP professional when any allegation of misconduct by a CFP professional is made to FPSC.

“Most planners get into trouble not because they are bad people but because they made an error in judgment,” says Dorothy Hagel, J.D., a CFP professional whose law practice specializes in representing people who face disciplinary hearings, or are involved in compliance and regulatory reviews or investigations.

So how does a CFP professional land on the radar of FPSC’s Standards Enforcement?

“FPSC learns of potential violations of FPSC’s Standards of Professional Responsibility in a number of ways including monitoring other regulatory proceedings, reviewing media reports, and receiving voluntary disclosures by CFP professionals. But, most commonly, complaints result from consumers’ phone calls.

Most of the inquiries concern advisors who do not hold CFP certification and therefore are outside our jurisdiction,” says Rotstein.

• Feesnotexplained

• Compensationnotfullydisclosed

• Noletterofengagement

• Unprofessionalconduct(e.g.,withclient, or marketing/soliciting business)

• Unsuitablerecommendations

• Actiononinvestmentswithout client consent

• Conflictsofinterest

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However, if the inquiry is about a CFP professional, the complainant may elect to launch a formal complaint. All complaints against a CFP professional must be made in writing (either by mail or e-mail, or through FPSC’s website) in accordance with the DRP.

“Many complaints are the result of miscommunication between parties,” says Leona Tranter, Director, Standards Enforcement at FPSC. “We encourage clients to speak with their CFP professional for clarification and possible resolution before escalating the situation to that of a formal complaint.”

To avoid these miscommunications, and to protect themselves from disciplinary proceedings, Tranter urges CFP professionals to monitor and update changes to their clients’ profile and to the nature of each engagement, and to

“document, document, document.”

Once a complaint has been made, FPSC conducts an initial review and assessment of the complaint within 90 days.

“We determine whether, if all the facts or allegations made in the complaint were true, it would constitute a breach of the Standards of Professional Responsibility,” says Tranter.

“If the answer is ‘no,’ we will dismiss the complaint and the CFP professional would never know about it. However, if we answer

‘yes’ to that question, a formal investigation will be opened.”

When a formal investigation is launched, FPSC may consult the complainant and ask for any supporting documents, if not already provided, that support the claim. FPSC then gives written notice to the CFP professional that a formal investigation has commenced and outlines the substance of the complaint.

CFP professionals are required to fully co-operate with the investigation, and have 30 days from the receipt of the notice to reply to FPSC in detail, including providing any documents or files in respect to the complaint. “The worst thing you can do is resist the investigation,” says Hagel.

Hagel also cautions against misleading an investigation by presenting falsified documents. “Do not fudge or manufacture records—99.99% of the time you will be found out and caught, and you may be more severely punished. You also hurt your own credibility in the proceedings.”

A formal investigation will result in one of three outcomes; a dismissal of the complaint where no further action will occur, a dismissal and issuance of a private letter of caution, or a referral to a disciplinary Hearing Panel for adjudication.

Cautions are a private sanction that remain on a CFP professional’s record with FPSC; they are typically issued to address a situation in which a finding of professional misconduct is unlikely, but a warning to the CFP professional is nonetheless warranted. However, some cautions are made available on FPSC’s website (with the name of the CFP professional withheld) and in the FP Standard as

“Anonymous Case Histories” as useful learning guidance to other CFP professionals.

In instances in which Standards Enforcement refers the matter to a Hearing Panel, the Director of Standards Enforcement must make an Offer of Settlement on behalf of FPSC before the case proceeds to a Hearing Panel. An Offer of Settlement includes a statement of agreed-upon facts; details of the rule(s) violated and the agreed-upon penalty; an acknowledgment that the violation and sanction will be made public; and the waiver of all rights to appeal.

Should a CFP professional elect not to accept the Offer of Settlement, a Hearing Panel, consisting of a Panel Chair selected from the Enforcement Policy Committee (EPC) and two volunteer CFP professionals, will hear the arguments of both parties and render a decision within 30 days. “Either party can appeal the verdict within 30 days of the decision on grounds concerning errors of fact or process,” says Tranter.

If the decision has been rendered and finalized, and if the allegation(s) of misconduct by a CFP professional are found to have occurred, the result will be disclosed on FPSC’s website for a period of 10 years, and also may be included in any of FPSC’s publications, in the media, and disclosed to the CFP professional’s employer at FPSC’s discretion.

Tranter acknowledges that the disciplinary proceedings will always have critics from both ends of the spectrum. “The complainant may think we are too lenient, while in the same instance, the CFP professional may believe the sanction was too harsh.” Tranter adds, “But at the end of the day, if the process is open, transparent and fair to all parties, we are doing our job effectively.”

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Diverse Working & Connecting in a

WorldCulturally

Cultural differences, unfamiliarity with Canada’s financial products and services, language barriers, and issues of trust all pose challenges for newcomers and first- or second- generation Canadians.

According to the 2011 Census, two thirds of the people added to the Canadian population since 2006 were immigrants. Statistics Canada projects that by 2031 almost one half of the population over the age of 15 will be foreign-born or have at least one foreign-born parent.

Thriving multiculturalism offers rich opportunities for financial planners and professionals to establish healthy relationships and better serve this emerging population. The key to connecting lies within a better understanding of different cultures and their traditions. But Canada receives its immigrant population from more than 200 countries of origin, so where do you start?

Lionel Laroche, President, MCB Solutions, and presenter at FPSC’s fourth annual Financial Planning Vision 2020 Symposium on November 20, suggests starting by choosing a community you’d like to help, one that resonates with you personally. “Learn more about that community in particular by being involved in their events. If you have Chinese customers, you want to really connect with them around Chinese New Year. If you have Hindu clients, you want to connect with them at Diwali.”

Through his company Laroche provides cross-cultural training, coaching and consulting services to a wide range of businesses. He recommends planners find a cultural

“mentor” to help bridge the gap between the two worlds:

“Someone who’s from that community, for example, but has really adapted to the Canadian way of life,” he suggests.

“Maybe a second-generation person who can understand both ways and help you interpret or decipher what’s going on when you have a meeting with people and the outcome is not what you were expecting.”

Second-generation Canadians often have what Laroche refers to as “a weighted average” between the Canadian mindset and that of their parents.

To get better acquainted, Laroche proposes visiting your clientele’s country of origin. He says, “Go to their home country. And see what it is like. Because when you go to China or India there’s a lot of behaviours that Chinese or Indian people have in Canada that may not make sense to many of us but they make complete sense in their home context.”

He adds that travelling to your client’s country enables better two-way communication. “When you meet anybody from any country outside of Canada and you can tell them, ‘I have been to your country,’ you will see their eyes light up. It’s like when you travel to the US and someone says ‘I have been to Canada.’ You immediately look at this person very differently from the average person who doesn’t know where Canada is.”

Canada’s open-arms approach to immigration has resulted in the fastest-growing population of any G-8 nation: 600 newcomers have arrived in Canada daily since 2006. Seventy percent have settled in Toronto, Vancouver and Montreal. British Columbia has the highest proportion of visible minorities, followed by Ontario. The Ontario city of

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DiverseWorld

Canada’s open-arms approach to immigration has resulted in the fastest-growing population of any G-8 nation: 600 newcomers have arrived in Canada daily since 2006.

continued on page 9

Markham has the highest concentration of visible minorities in the country—65.4 percent of its population, with half being Chinese and one quarter being South Asian.

Laroche says, “I live in Markham, and whenever I go to a bank there, the odds of being serviced by someone who is Chinese is pretty high. And in that sense, I think the banks have it right. Because if they can service people in their first language they can relate to the customer.”

Jalileh Helalat, Manager of Programs and Services with Skills for Change, agrees that familiarity is number one when earning the trust of the newcomer. Skills for Change is a not-for-profit organization in Toronto that offers programs for internationally trained professionals seeking employment in their field. “You need to have someone who can speak with them in their own language,” she says,

“to be able to answer every question, to talk about the benefits, of, let’s say, life insurance and other investments.”

She says most immigrants walking through the doors of Skills for Change are professionals and “the majority come with money.” Despite having wealth to invest, she believes many newcomers feel emotionally insecure in a new country and prefer to simply leave their money in the bank rather than take chances on unfamiliar financial products.

“When you educate newcomers, you speed up the process of integration not only into the Canadian work culture but into their new community. And if that doesn’t happen they

cannot contribute. We cannot benefit from their skills and from their investments.”

Helalat speaks from the heart. Before working for Skills for Change, she was a client and says she “completely understands the struggles” of new Canadians: “I went through every step; I faced a lot of barriers.”

Helalat encourages planners to consider approaching immigrants and international professionals by way of sponsorship and collaboration with non-profit agencies. Skills for Change currently works with a variety of financial institutions and government regulatory boards to present information sessions to help newcomers with their finances.

“I think financial institutions can really do a lot if they are willing to know more about the newcomers and the benefits of dealing with them,” she explains. “And with the proper guidance, they would really be able to benefit themselves, the community and country as a whole.”

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Working & Connecting continued from page 8

continued on page 12

Whether meeting in an office setting or consulting with a group at a seminar, Laroche urges all planners to sharpen their listening skills to better understand the diverse perspectives of the people in the community they serve. He recommends paying special attention to culture-specific attitudes on credit, mortgages and using debt to finance everyday expenses.

“For people coming from most of East Asia, any debt is bad debt. They’ll often be very reluctant to have a mortgage or even get a loan for a car. They’d rather live in a small place and save money until they have enough to pay cash for a house, as opposed to using a mortgage no matter how low the interest rates.”

That’s good news for the financial planning sector according to Laroche. “Immigrants often save more money and in turn have more to invest. Those are obviously very interesting potential clients.”

Laroche notes that 30% of Canada’s wealthiest people were born outside of the country. Survey results from a BMO Harris Private Banking study conducted in 2011 confirm that almost one third of all high–net worth Canadians (defined as those with investible assets of $1 million or more) were not born in Canada and almost all new affluent Canadians keep the bulk of their wealth in Canada.

Abundant OpportunitiesCurrently, Canada holds the title for accepting more immigrants per capita than any other country, and Laroche sees abundant opportunities to meet the needs of the country’s multicultural population. Take, for instance, the small business owner. Laroche says, “The percentage of immigrants who start their own business is significantly higher than the percentage of Canadians who start their own business.” He points out that some bring their business dreams to Canada while others start businesses out of necessity after difficulty finding work in their professions.

Laroche also advises planners to carefully discuss risk tolerance when setting objectives for newcomers. “People’s idea of what is a good investment and what is a risky investment will very much depend on where you are

in the world,” he begins. “In Mexico, for example, a bond is considered a risky investment because the Mexican government has defaulted on bonds on several occasions. The average Mexican’s idea of a safe investment is a piece of land or a house. No matter what happens to the financial markets—the country can go upside down and it has in the past—that land will still be there and still be mine.”

“On the other side of the spectrum, you have a place like Hong Kong,” he continues. “In Hong Kong, everybody’s buying into the stock market so it only gets risky for them when you start getting into derivatives. In Hong Kong the number-one subject for chitchat is the markets. Here we talk about the weather and hockey; there they will discuss the currency market, the stock market and the real estate market.”

In places where people are comfortable taking risks, Laroche says it is sometimes difficult to sell financial products like life insurance. Insurance is also a delicate area of discussion because in Chinese culture it’s disrespectful to speak about death. “Discussing death is almost like inviting it,” cautions Laroche.

He also advises planners to do a little research before talking to clients about estate planning and the role of philanthropy.

“Planning for death is along the same lines as discussing life insurance. It’s not a popular thing in certain cultures. Also, people don’t leave money to charity; money is redistributed to family members.” Likewise, “Immigrants tend to be less active in non-profit organizations with the exception of those that specifically give towards their community because in collective cultures, you volunteer within the context of your family. You volunteer by helping your brother-in-law move and you help your cousin twice-removed with the children’s care. The family is much more extended in most cases and the social obligations are much higher, which leaves very little time for volunteering in the context of the average Canadian.”

Service Fees An immigrant himself, Laroche points to a Canadian convention he personally loathes—fees. “Fees are definitely a challenge because there are many countries where the fees are essentially included in the service. I come from France. In France banks don’t charge service fees

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Global Trends in Financial Planning with Karen SchaefferKaren Schaeffer, CFP®, is the Board Chairperson for Financial Planning Standards Board, the non-profit membership association of 24 CFP certification bodies including FPSC. We recently caught up with Karen to discuss the increase in CFP professionals in existing markets, plans for expansion in the Middle East and regulatory trends happening in the financial planning profession.

Growth of CFP MarksThe emergence and continued growth of wealth (particularly the middle class) in countries such as Brazil, India, and China and other emerging markets has fuelled the growth of newly certified CFP professionals. In China alone, in the first half of 2012, the number of CFP professionals grew by 31% from 10,800 to more than 14,000. “In these territories, people are getting wealthier. With increased wealth comes a need for financial planning, because individuals now have something they need to protect and grow,” says Schaeffer.

The global economic crisis has undoubtedly made consumers more aware of the need for competent, ethical financial planning advice and Schaeffer sees opportunities for growth in markets such as Canada and the United States where the CFP designation is already established.

“In the US, 67,000 CFP professionals simply can’t meet that need. We also see a trend [in the US] of more brokers

leaving the traditional wire house firms to work as independent advisors and these advisors wanting to distinguish themselves with the high standards required of CFP professionals.”

Middle East ExpansionIn 2012 FPSB held its first meeting in the Middle East region when the 24 affiliated organizations met in Dubai.

“It was a perfect opportunity to explore opportunities for growth,” says Schaeffer.

“Our discussions with government and business representatives in Bahrain, Dubai, Jordan and Saudi Arabia really helped us understand the readiness of the region to embrace financial planning.” FPSB remains in discussions with the region’s banking institutes and is hopeful that they will be able to bring CFP certification to the region soon.

Regulatory TrendsSchaeffer believes that the proposed and recent reforms in the United Kingdom (Blueprint for Reform), Australia (Future of Financial Advice, or FOFA), the United States (Dodd-Frank Act) and other areas have been

“motivated by a lack of [consumer] trust, and a lack of confidence in products.” While the movement in the United States has yet to take much effect other than increased compliance requirements, “in the UK and Australia we’re seeing moves toward recognition of professional bodies, increased minimum

education requirements and perhaps the most significant change—the banning of commissions.”

While Schaeffer was “generally happy with the FOFA legislation,” FPSB would have “liked to see protection of the term ‘financial planner’ included as part of the legislation, though our understanding is that the door is not closed to that possibility, so we could see it come forward in the future.”

Although each country, including Canada, has to deal within its own regulatory environment, Schaeffer reiterates that future regulation of financial planning and financial planners will continue to be “aligned along the global themes of consumer protection and transparency while allowing for significant national variation.”

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2012 FPW Challenge Winners

AlbertaKelley Doerksen, CFP® Edmonton, AB

Family Financial Wellness Event Kelley will host a family-focused event that will empower families to take step-by-step, positive financial action to achieve their goals.

Prize money donated to $250 RESPs to each of two attendees

Atlantic CanadaDeborah Jean Young, CFP® Deer Lake, NL

The Retirement Rules HaveChanged,WhatNow?Deborah will cover the changes to Canada Pension, Old Age Security and retirement in her seminar geared toward the 50-plus age group.

Prize money donated to Deer Lake Food Bank

Redge Deg, CFP® Halifax, NS

Planning Your Financial Future Redge will present the different aspects of selecting an executor of state, and provide each attending family with a package of financial planning reference materials.

Prize money donated to Student Graduation Scholarship

In 2011, FPSC® initiated the Financial Planning Week Challenge, which encourages CFP® professionals across Canada to promote financial planning in their communities. This year, the following individuals submitted unique and creative proposals on how they would bring financial planning to specific demographic groups across Canada. All 12 winners decided to give their $500 prize money to their community. For more information on these events and others please visit www.financialplanningweek.ca

British ColumbiaAlexandra Gilgunn, CFP® Victoria, BC

Financial Planning for Young Families Alexandra’s two workshops will reach out to young parents who need more hands-on experience with managing often-limited financial resources.

Prize money donated to Young Parents Support Network

Stephanie Dean, CFP® Victoria, BC

Financial Planning for All Abilities Stephanie will host an educational event to promote awareness and instigate action to ensure a financially stable future for people with disabilities.

Prize money donated to RDSP contribution for a participant

Tom Markham, CFP® and Dave Petrie, CFP® Delta and Surrey, BC

UnderstandingMoneyMattersand Having Fun With It and Business Succession Planning Tom and Dave will present two financial planning seminars: one targeted to high school students and one focusing on business owners.

Prize money donated to Delview Secondary School

ManitobaJewel Reimer, CFP® Headingley, MB

The Fuss About Fees Jewel will present to the general public an open discussion of fund fees and how they affect one’s financial future.

Prize money donated to Headingley Library

OntarioNancy Edmison, CFP® Milton, ON

Financial Strategies for Caring for a Loved One with a Disability Nancy will present a seminar focused on financial considerations when planning for a loved one with a disability.

Prize money donated to Windrush Stables

Paul Beck, CFP® Hamilton, ON

It’s About Your Financial Life Paul will host an event focused on the different elements of money and financial planning to a middle-aged audience.

Prize money donated to Marvin Ryder Foundation

Roger Touw, CFP® Toronto, ON

Students: Plan for Your Succe$$ Roger will host two seminars to enhance the financial understanding of students and provide them with tips to build financial security.

Prize money donated to Go Green Project

Vanessa Chan, CFP® Markham, ON

Parents Helping Kids Help Themselves Vanessa will host two workshops to give tips to parents on how to integrate early childhood financial literacy into their family life.

Prize money donated to Sir John A Macdonald Public School

SaskatchewanJay Stark, CFP®; Stuart Sutton, CFP®; Tim Hansen, CFP®; and Andrea Hansen, CFP® Saskatoon, SK

CONNECT2012: Workforce Finances to Personal Family Finances CFP professionals from Sutton Financial Group will provide immigrants and refugees with information about the financial aspects of the workplace.

Prize money donated to Global Gathering Place

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A CFP professional since 1998, Clay Harmon has been working in the financial planning industry for over 35 years. Clay currently works with a First Nations community in British Columbia as a contract administrator and also serves on the board of the Aboriginal Financial Officers Association (AFOA). Clay has presented personal financial planning workshops for individuals, and specializes in strategic investment policy for First Nations communities.

The residential school legacy can still be felt today. “As a result [of this policy], multigenerational problems persist, and there are also challenges in adapting to the current North American government structure,” says Clay. “So I admire the communities that are stepping up to the plate and really taking control of their lives, particularly within the area of financial planning.”

Thus, the importance of Clay’s role as a CFP professional within the First Nation community is being able to assist in these multigenerational gaps. He is teaching individuals how to set and achieve financial goals and, by doing so, he is seeing a positive change.

1. If I wasn’t a financial planner I’d be …A missionary.

2. The best piece of financial advice I ever personally received was …

Spend less than you make and live debt free.

3. The first thing I ever saved money for was …A bicycle.

4. My most valuable possession is …My Bible.

5. My most satisfying client interaction was …When one participant declared that after taking part in a personal financial planning workshop, he didn’t fight with his wife anymore. Instead of wondering what she did with all the money he gave her for the household, he was amazed that she got everything done with the little that he gave her.

This section profiles a CFP professional who’s doing something inspirational, meeting a unique need, or taking planning in a new direction! Share your story: e-mail us at fpstandard@fpsc.ca

Working & Connecting continued from page 9

for everyday transactions. They just don’t charge any fees, that’s the way it’s been set up. So every time a bank charges me 25 cents I react like it’s a rip-off. I’ve been in NorthAmerica26years;Istillhavethatreactioneverytime I see these transactions on my statement.”

According to Laroche, the biggest and most obvious opportunity in a culturally diverse world is the market for Registered Education Savings Plans. “Most immigrants who come to Canada were highly educated by their home country standards. If you have a Bachelors Degree

in India you are in the top 3% of the population, and education is obviously of very high value to you.”

From2001to2006,56%ofimmigrantsheldauniversitydegree. “They come to Canada to succeed. They want their children to succeed. Including RESPs in a financial plan is a no-brainer,” he concludes, reminding us that consumer behaviour and purchasing decisions are often drivenbyculturalinfluences.Stayingculturallyrelevant is the key to unlocking potential growth and building long-term relationships in the financial planning industry.

5Questionsfor Clay Harmon, CFP®, CMA, FCMA, CAFM

FPStandardP13

ethicscorner“Ethics Corner” presents scenarios developed from practice-based inquiries we’ve received from CFP® professionals. Leona Tranter, FPSC’s Director, Standards Enforcement, provides an explanation of how the Case Study and the ethical issues therein relate to the Standards of Professional Responsibility for CFP® Professionals and FPSC® Registered Candidates.

We then present another Case Study and ask you to respond to it: what would you do? Read the scenario and submit your response to fpstandard@fpsc.ca (subject line: Ethics Corner).

Brent Dallas is a CFP professional who has been providing financial planning services for Mr. Hughes in Goose Bay, Newfoundland. Several years ago, Brent became the CFP professional for Mr. Hughes and his wife when their accounts were transferred from another financial institution.

Mr. and Mrs. Hughes, both of whom are in their 70s, were satisfied with the investments they held at the time of transfer, and were not looking to make any changes. Brent met with them periodically over the next several years. During that time, Mr. Hughes fell ill, so Brent helped Mrs. Hughes with filing tax returns and other documents.

At one meeting after Mr. Hughes had been hospitalized, Brent recommended some investment changes to Mrs. Hughes. She declined, saying that she wanted to keep

“things as they are.”

Several months later, Mr. Hughes passed away. Brent learned that Mrs. Hughes had become incapacitated and was hospitalized in a long-term-care facility. He was contacted by her Power of Attorney (the Attorney), a neighbour whom Mrs. Hughes had come to rely on.

The Attorney set up a meeting with Brent to transfer the Hughes’ account to another firm as he was dissatisfied with her investments. He also wanted to change the beneficiary designation on the registered account from Mrs. Hughes’ estate to himself.

Answer to Case Study 5Although a Power of Attorney (POA) may give a directive to act on behalf of another individual, a CFP professional’s obligations is always to put the original client’s interests first.

A POA serves distinctive functions. Consequently, we advise CFP professionals to tell clients to refrain from a general “one size fits all” document, in favour of one with specific limitations.

When working with a POA, it is important to understand the desired role of the Attorney. Is he acting under a POA for property, or personal care? The former covers an individual’s financial affairs, while the latter does not. Unless specifically

What are Brent’s obligations to Mrs. Hughes and/or her Attorney? Should he make the beneficiary designation change?

Case Study 5

clarity around ethical situations

NOVEMBER 2012 | ISSUE 6 | P14

Case Study 6

restricted, the Attorney under a POA for property has the power to do anything the client (grantor) can, such as account withdrawals, money transfers , and selling stocks and bonds. Although a legal document, the POA cannot suspend your history with your client. If your client had a history of investing conservatively and never wanted to make substantive changes to his or her risk profile, then the Attorney’s sudden dissatisfaction with the financial plan may raise some red flags–particularly if the Attorney wishes to change the designated beneficiary of the client’s finances to him- or herself.

The terms of the POA need to be carefully reviewed to confirm the Attorney’s powers and its validity (e.g., many POAs are valid on the date of execution; however some may have a delayed effective date, or run only for a specified time period). Further, does your firm have any established protocol when dealing with POAs? When in doubt, it is always advisable to refer the POA to your firm’s Compliance Department. Often times, the additional scrutiny will flush out the true intentions of the POA and whether or not the Attorney is acting in the client’s best interests.

If you are concerned about the Attorney’s intentions, the legality of the document or potential elder abuse, advise the Attorney that, extra diligence and care must be given during its execution. And as always, ensure that any discussion is documented in detail.

It may be tempting to raise your concerns with the client’s family members. Be cautious. You risk breaching confidences. It depends upon the circumstances of each individual case, your relationship with, and knowledge of your client and their extended family.

Guardianship of elder abuse is still in its infancy and varies between the provinces. The process for reporting such occurrences, and to whom, is not consistent. In the absence of a defined regulatory framework, any serious concern of financial abuse, should be reported to the police.

Dolly Smith, a CFP professional in Whitehorse, Yukon, has been practising for 20 years. Mr. Agarwal moved to Whitehorse five months ago from Punjab, India. He saw Dolly’s ad in the local newspaper. Mr. Agarwal consulted his neighbour, one of Dolly’s clients, who advised that Dolly is a knowledgeable expert and well known in the community. Wanting to protect his assets until he established his career in the mining industry, Mr. Agarwal called Dolly’s office and spoke with her assistant to set up an appointment.

Prior to the appointment, Mr. Agarwal conducted his own research to familiarize himself with different investment options. He wanted to not only understand the conversation he would be having with Dolly, but also ensure he would be asking appropriate questions, as well as show that he is eager to participate in her financial planning process.

During the meeting, Mr. Agarwal attempted to discuss what he had learned about RRSPs. Dolly could not understand what Mr. Agarwal was saying, asking him several times to repeat himself. Not understanding why Dolly could not understand the basic fundamentals of retirement planning, Mr. Agarwal, grew increasingly frustrated. His accent became increasingly more pronounced. Dolly still could not fully understand what he was saying and believed that Mr. Agarwal was becoming angry and aggressive. Mr. Agarwal then pulled out a book and showed Dolly the page on RRSPs. He exclaimed, “Why do you not know this? This is your job! Even I know what this means! Does your employer not train you?”

Feeling frustrated and threatened by Mr. Agarwal’s tone, Dolly told him that she could not be his advisor and demanded that he leave her office or she would call the police.

Why did the meeting fail? What could Dolly have done differently? E-mail your opinion to fpstandard@fpsc.ca. Your answer may be published in the next issue of the FP Standard.

Please be aware that if we publish your response, we will include your first name and designation alongside your answer. Your response may be edited for length.

20 TMFPSC

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Look for this symbol when researching CE providers’ activities for your assurance that the activity qualifies as a FPSC-approved CE Activity and the number of credits earned.