Professionalism and consumer protection: two sides of the same coin
There are many different organizations and resources for consumer protection in Quebec. Professionalism is one of the safeguards for the protection of the public, and has a proven track record in many areas, including the financial services sector. But are you familiar with the way it all works?
You have no doubt already heard of the Collège des médecins du Québec, the Chambre des notaires and the Quebec Bar. These organizations are among the 46 professional orders that make up the Quebec professional system and whose mission is to protect the public. The reasoning behind this system is simple: lawmakers have determined that consumers would be at risk if they allowed any person into the practice of occupations requiring special skills, knowledge and know-how. Therefore, regulated professions were created, with strict requirements for training, ethics and professional conduct.
In the world of financial services in Québec, it is the Chambre de la sécurité financière (CSF) that oversees the integrity and professionalism of more than 32,000 financial services advisors practicing in their respective fields (see the first box below).
In keeping with the mandate of professional orders, the CSF’s mission is to ensure the protection of the public by supervising the practice of its members. As such, advisors who are members of the CSF not only hold a right to practice issued by the Autorité des marchés financiers; they are also required to comply with a code of ethics and undergo mandatory continuing education. Furthermore, if a client believes that a professional is not performing their duty properly or is guilty of an ethical fault, he may submit a complaint to the CSF.
How do professional requirements benefit the consumer?
The basic leading principle for all certified advisors is to act in the best interests of his client. This principle is reflected in a course of conduct that is easily recognized and that you should assess when dealing with a professional:
- Your advisor takes the time to get to know you well
To counsel someone, you need to know them. Your advisor should therefore ask many questions about your financial and personal situation, your goals and your level of financial literacy. Your answers will help form an in-depth analysis and recommendations that will suit your needs.
- Your advisor knows what he is talking about
Financial products are usually complex – that is precisely why you should call on an expert! Your advisor is there to explain the features of different products, their advantages and drawbacks. He must possess extensive knowledge in order to answer your questions accordingly.
- Your advisor offers you suitable products and appropriate strategies.
Your advisor must be able to explain the link between the analysis of your situation and the recommendations he makes to you.
- Your advisor often checks that you have properly understood
Your advisor should invite you to question, define or rephrase the same idea several times… until you fully comprehend it! When making a decision, it is your good understanding that will ensure you are giving informed consent.
- Your advisor writes everything down
Once you have found the right advisor, your relationship can last for many years, during which time your personal situation will evolve. To ensure nothing is forgotten when planning for tomorrow, it is essential to keep records of your conversations and the strategies established over time.
- Your advisor is available and diligent
Your advisor should return your calls and process your requests quickly. If your professional is a mutual fund advisor, he must also follow up with you regularly. Although the law does not provide a frequency requirement for this (as clients’ needs may vary), it is generally good practice to follow up with your advisor on an annual basis.
- Your advisor can fully and accurately respond to questions about his earnings
In the financial sector, there are several compensation structures pertaining to your advisor’s earnings (wage, fees, purchase costs, deferred costs, etc.). He will help you select the one that suits your needs and your values.
- Your advisor protects your personal data
Your advisor must ensure that the information he collects about you is protected, including through the use of secure storage methods.
In closing, it is important to remember that part of your advisor’s role is also to reassure and help you manage your emotions during difficult times – whether personal events are affecting your finances or you are concerned with anxiety-inducing stock market movements, such as those produced by the COVID-19 pandemic.
If you would like to learn more about professional counselling, visit the CSF website or call us at 514 282-5777.
Becoming familiar with the various professional titles of advisors
It is in the best interest of the informed consumer to learn the various professional designations of the CSF’s members in order to determine who to contact based on their personal needs.
The mutual fund representative
This professional can advise you regarding investment in mutual funds. Mutual funds are funds in which investors pool their savings.
The financial security advisor
Financial security refers to the field of life and health insurance. This professional, also known as a “life and health insurance representative”, can therefore offer you consulting services and life and health insurance products.
The group insurance and group annuity plans advisor
With respect to group insurance and group annuities, they mostly refer to the benefits programs offered by employers to their employees. As with mutual funds, the term “group” alludes to the notion of pooling. In essence, this professional is authorized to offer employers products and consulting services related to group insurance and annuity plans specifically adapted for businesses.
The scholarship plan representative
As the name indicates, this professional offers his clients investments that are specially designed to finance their children’s education.
The financial planner
The financial planner can offer you advice in seven areas of practice: insurance, finance, taxation, legal considerations, investments, retirement and estate planning. If this professional wants to sell you financial products, however, he requires an additional licence to distribute each type of product. For example, to sell life insurance, a financial planner must be licensed as a financial security advisor.
In Quebec, there are more than 32,000 professional advisors and the CSF oversees them all. One third of them are also multidisciplinary, meaning that they hold between two and five licences of practice and are therefore legally permitted to advise you in their respective fields of competence.
In 2016, a study by the Quebec research centre CIRANO observed that after 15 years, investors who consulted a professional had accumulated 290 per cent more assets than those who had invested independently. After 4 years, the difference was already 69%.