Why the IAFP is adopting a fiduciary standard for financial planners

This is Globe Advisor’s weekly newsletter for professional financial advisors, published every Friday. If someone has forwarded this newsletter to you via e-mail, or you’re reading this on the web, you can register for Globe Advisor, then sign up for this newsletter and others on our newsletter sign-up page. For more from Globe Advisor, visit our homepage.
The Institute of Advanced Financial Planners (IAFP) intends to introduce a new fiduciary standard for its members, effective when they renew their memberships in 2026.
In a letter to members last week, the organization stated its intention to become the first financial planning credentialing body in Canada to introduce a fiduciary standard. The move will assure clients that financial planners who hold the registered financial planner (RFP) designation provide advice “based on what’s truly best” for the client and free from self-interest, the letter stated.
Aaron Hector, the IAFP’s vice-president and symposium chair in Calgary, says the standard will elevate the professionalism of financial planning in Canada, and could attract more interest in membership.
He recently spoke with Globe Advisor.
Why is the IAFP introducing a fiduciary standard now?
A fiduciary standard has been discussed at the board level for years but it never quite seemed like the right time. The fear was too many members would not be willing to raise their hand and hold themselves out publicly as a fiduciary.
But in the last few years, we have seen many positive developments. When we look at other organizations, the CFP Board in the U.S. changed some of its code of conduct to reflect fiduciaries. The Financial Planning Association of Canada also has a fiduciary pledge. So, we see a growing appetite and willingness to state fiduciary values publicly.
The values are holding your client’s best interest over your own. You have a duty of fidelity, honesty and complete disclosure to your clients. You can’t act with self-interest.
While this announcement is the board’s intent, we are going to have some focus groups and also discuss at our annual general meeting. But so far, the initial reaction has been overwhelmingly positive.
What does the process toward adoption look like?
We’ll have to make some changes to our code of ethics and make it as part of our renewal each year, that RFPs are willing to hold themselves out as fiduciaries. We have our vision and direction but details still need to come into place. For example, how are we going to discipline if we hear of someone who’s not holding themselves up to the standard that they attested to? We’re going to need to ensure that our disciplinary framework deals with that. We have a year to finalize those details.
Do you foresee any challenges?
There could be current RFPs who would not feel comfortable being so vocal about holding themselves to a fiduciary standard. I expect those situations will be minimal. Even if there is some attrition, it could be quite good for membership growth over the long term. There are many high-quality, ethical financial planners who would look for a designation where they have to attest that they are holding themselves as fiduciaries.
This interview has been edited and condensed.
– Deanne Gage, Globe Advisor reporter
How advisors can deal with stock-picking clients
Maybe it’s a retired entrepreneur who calls every morning just before markets open to ask if you’re planning any trades that day. Or it could be an early-career professional who sends e-mails whenever she chats with a neighbour who seems to own nothing but winning stocks. Most financial advisors have at least one client who reaches out frequently to ask why something is or isn’t in their portfolio. “What we’re seeing today is a higher level of distrust caused by several factors, such as a higher cost of living. And that’s driving a lot of these stress responses,” says Stefanie Keller, chief executive officer and certified financial planner at Stellar Wealth and Tax Solutions in Winnipeg. How’s an advisor to cope? Marjo Johne explains.
When dumb money chases a dead cat bounce, and other investment jargon explained
Every industry uses jargon that leaves outsiders scratching their heads. Investors may be among the worst offenders. Terms such as “alpha,” “dumb money,” “value trap” and – perhaps the least appealing – “dead cat bounce” are often used among traders and investors to characterize market actions. Despite pressure for advisors to communicate with clients more clearly, industry slang can be hard to shake. We asked advisors to share the investment jargon they hear most – and sometimes catch themselves using. Brenda Bouw explains 10 of those terms.
Investors exiting high-fee balanced mutual funds en masse amid increased fee disclosure
Canadian investors are shifting out of high-fee, commission-based balanced mutual funds toward lower-fee options as rules around fee transparency gain traction. A recent report from Morningstar Canada on balanced funds found that commissions-based advice share classes of balanced mutual funds had outflows of $74-billion from the beginning of 2022 through December, 2023. The trend has continued this year, according to data from the Investment Funds Institute of Canada, as investors sold almost $19-billion in balanced mutual funds in the first half of 2024. The Morningstar report says the client-focused reforms are having an effect. Gillian Livingston reports.
How investment funds are playing India, the new emerging markets star
Three ways advisor teams can boost compliance
How this advisor learned to navigate the emotional side of investing
Why manager selection is critical when investing in private credit
Richardson Wealth names new CEO as Kish Kapoor announces retirement
Richardson Wealth’s chief operating officer Dave Kelly will take over as the wealth manager’s chief executive on Oct. 1 as Kish Kapoor announces his retirement. Mr. Kapoor said Wednesday he will be stepping down as president and CEO after leading Richardson Wealth since it was restructured as a public company in 2020. He will remain on the board of directors. Clare O’Hara reports.
Wellington-Altus chair owned stake in ETF company Emerge while his firm promoted its funds to clients
Wellington-Altus Private Wealth founder and chair Charlie Spiring maintained an ownership stake in the U.S. affiliate of Emerge Canada Inc. while his firm promoted Emerge’s exchange-traded funds to clients for several years before the ETF manager’s collapse. Buffalo-based Emerge Capital Management Inc. was one of three fund companies Mr. Spiring took an ownership stake in while also offering their products to his firm’s clients, Wellington-Altus confirmed to The Globe and Mail. His relationship with Emerge was not widely known among the company’s own advisers or its clients, according to multiple sources. Clare O’Hara and David Milstead report.
Investors support proposed Canadian sustainability disclosures, but companies are pushing back
Some of Canada’s largest institutional investors support the quick adoption of a slate of new sustainability reporting standards while energy and mining companies want disclosure to remain voluntary and exclude items such as indirect carbon emissions. The Canadian Sustainability Standards Board is poring over 169 responses to its call for input into plans to adopt international rules for sustainability and climate-related reporting. The feedback shows a stark divide between investors such as pension funds and asset managers demanding detailed comparable data and companies that say some factors are still too uncertain and implementation too burdensome. Jeffrey Jones reports.
– Globe Advisor Staff