DECISION DOCUMENT CO .... , •• 'o ... Date: August/D, 2012 IN THE MATTER OF THE SECURITIES LEGISLATION OF MANITOBA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLCATIONS IN MULTIPLE JURISDICTION AND IN THE MATTER OF THE INSTITUTE OF ADVANCED FINANCIAL PLANNERS (IAFP) AND VALUE PARTNERS INVESTMENTS INC. (VPI) (collectively, the Filers) DECISION Background The securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an appl ication from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) under section 9.1 of National Instrument 81-105 Mutual Fund Sales Practices (NI81 -105) exempting the Mutual Fund Organizations (as defined herein) from the prohibition in subsection 5.4(1 ) of NI 81-105 to permit them to pay the direct costs (as such term is defined in NI 81-105) incurred by IAFP relating to a conference, seminar, course or other educational event (collectively, the Annual National Symposia) that is organized and presented by IAFP (the Requested Relief). Under the Process for Exemptive Relief in Multiple Jurisdictions (for a dual application) (a) Manitoba is the principal regulator for this application; (b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in all provinces and territories in Canada; and (c) the decision is the decision of the principal regulator and evidences the decision of the securities regu latory authority or regulator in Ontario. 500-400 51. Mary Avenue, Winnipeg, Manitoba R3C 4K5 ' tel: (204) 9-15.25411 • fllx: (204) 945 .0330' www.Olsc.gov. rn b.ca
Page 2 Interpretation Defined terms contained in Nationallnstrumen114· 1Q1 Definitions or in N181-10S have the same meanings in this decision unless they are otherwise defined in this decision. "Mutual Fund Organizations" shall mean a member of the organization of a mutual fund (as defined in NI 81-105) that wishes to pay the direct costs relating to an Annual National Symposium organized and presented by IAFP and sha ll include VPI, as Filer. "IAFP" shall refer to the Institute of Advanced Financial Planners, as Filer. "VPI" shall refer to Value Partners Investments Inc" as Filer. Representations 1. IAFP is a not for-profit corporation incorporated under the Canada Corporations Act. It is an industry organisation promoting professional development and expertise for individuals employed in the financial services industry who engage in financial planning. IAFP grants and administers the Registered Financial Planner (RF.P. ®) designation. IAFP was formed in 2002 when the Canadian Association of Financial Planners (the former granting body for the R.F.P. ® designation) merged with the Canadian Association of Insurance and Financial Advisors to form Advocis . Advocis joined with a number of other organisations in supporting the exam-based CFP designation granted by the Canadian Institute of Financia l Planners . . At the same time, some RF.P. ® holders established IAFP as a separate designation-granting body to maintain a separate identity for themselves as financial planners and to continue the RFP designation separate from the CFP designation. 2. The head office of IAFP is located at: 6362 Fraser Street, Suite #449 Vancouver, B.C. VSW OA1 3. In addition to educational programs, IAFP promotes professionalism in financial planning by advocating policy and legislation before government regulators at all levels, collaborating with other trade and industry associations in Canada, and administering a code of ethics that its members agree to abide by. The IAFP Code of Professional Ethics (the Code) governs the conduct of all of its members. The Professional Standards of Practice supplements the Code with practice guidance for the Reg istered Financial Planner (R F.P. ®) . All holders of the RFP® designation must comply with the standards as appropriate, or be subject to disciplinary procedures. 4. IAFP has approximately 400 members , who reside in the Jurisdictions. These members provide financial planning in accordance with the Professional Standards of Practice to include recommendations and advice relat ing to the purchase or sale of specific financial products. Members include individuals registered or licensed to sell life insurance, mutual funds or who act as fee only financial planners. There are four parts to the process of qualifying for the RF.P.® designation - obtain ing th ree character references from other professionals, submitting a comprehensive financial plan for peer review, and writing two examinations; one dealing with Ethics & Practice Standards, and the other being a fu ll-day Technical Competencies exam.
Page 3 5. There are four levels of IAFP membership. (a) Affiliate Membership: members who do not plan to be practicing financial planners. Affiliate members may attend the Annual National Symposia and other membership meetings. (b) Associate Membership: members must be employed in the financial services industry and are expected to obtain the R.F.P ® designation within 5 years. There are four parts in qualifying for the R.F.P. ® designation: obtaining three character references from other professionals, one of whom must be a Professional Member, submitting a comprehensive financial plan for peer review, successfully writing the Ethics & Practice Standards examination, and successfully writing the Technical Competencies exam. (c) Professional Membership: Associate Members of IAFP who have obtained the R.F.P. ® designation, a university degree (or equivalent), basic financial planning education (such as completion of the CFP requ irements or equivalent) and a minimum of 3 years experience in financial planning , must carry a minimum of $1 mi llion Errors & Omissions insurance, are financially solvent , have no criminal record and whose primary occupation is comprehensive financial planning as defined by IAFP. (d) Retired Membership: Professional Members who retire from their financial planning practice and who no longer service clients but who wish to remain in contact with their peers and colleagues. 6. As part of its services to all members, IAFP organizes and presents the Annual National Symposia, educational conferences held for the benefit of its members and other financial planning practitioners. The primary purpose of the Annual National Symposia is to provide educational information about financial planning, investing in securities, mutual fund industry matters, and mutual fund issues generally, and therefore complies with the requirements of paragraph 5.4(2){a) of NI 81-105. IAFP operating costs are covered solely through membership fees and Annua l Nat ional Symposia revenues. These Annual National Symposia are usually held in British Columbia or Ontario. Attendees generally earn credit hours towards their annual continuing education credits 7. VPI is a corporation existing under the laws of Manitoba , with its head office being located in Winnipeg, ManitobaVPI is registered as an Investment Fund Manager in Manitoba. 8. VPI is the manager and principal distributor of a number of mutual funds that are qualified for distribution in certa in provinces and territories of Canada. According ly, VPI is a member of the organization of a mutual fund family within the meaning of NI 8'-'05. 9. VPI wishes to sponsor certain or all of the National Annual Symposia. However, subsection 5.4(1) of NI 81-105 prohibits Mutual Fund Organizations from sponsoring the costs or expenses relating to a conference, seminar or course that is organized and presented by the Investment Funds Institute of Canada (IFIC), the Investment Dealers Association of Canada (IDA) (now named the Investment Industry
Page 4 Regulatory Organization of Canada or UROC) or another trade or industry association. 10. The IAFP can be considered to be another trade or industry association as contemplated by NI 81-105. 11. Subsection 5.4(2) of NI 81-105 provides an exemption to permit members of the organ ization of a mutual fund to sponsor conferences, seminars or courses organ ized and presented by IFIC, IDA (now ItROC) or their respective affiliates in accordance with the conditions set out therein. No equivalent exemption is provided in N181-105 for trade or industry associations such as the IAFP. 12. VPI proposes to sponsor the Annual National Symposia in accordance with the conditions set out in subsection 5.4(2) of NI 81-105 that are applicable to a conference organized and presented by IFIC or the IDA (now II ROC). 13. IAFP anticipates that other Mutual Fund Organizations will similarly wish to sponsor a portion of the costs of its Annual National Symposia and agree to pay such costs for such Annual National Symposia on the same conditions. If the Requested Relief is granted, IAFP will ensure that VPI and other Mutual Fund Organizations sponsor the Annual National Symposia in accordance with the following conditions: (a) the primary purpose of an Annual National Symposium will be the provision of educational information about financial planning, investing in securities, mutual fund industry matters, and mutual fund issues generally; (c) none of the Mutual Fund Organizations will pay in the aggregate more than ten percent of the total direct costs incurred by IAFP for the organization and presentation of an Annual National Symposium; (d) the selection of a representative of a participating dealer to attend any Annual National Symposium will be made exclusively by the participating dealer, uninfluenced by the Mutual Fund Organizations; and (d) Annual National Symposia will be held in Canada (collectively, the Conditions). Decision Each of the Decision Makers is satisfied that the test contained in NI 81-105 that provides the Decision Makers with the jurisdiction to make the decision has been met; The decision of the Decision Makers under NI 81-105 is that the Requested Relief is granted, provided that (a) the Mutual Fund Organizations and IAFP comply with the Conditions; (b) IAFP, on behalf of each Mutual Fund Organization (other than VPI) whose mutual funds are reporting issuers in Ontario and who wishes to sponsor an Annual National Symposia in reliance on this decision, file an advance written notice with
Page 5 the Director of the Investment Funds Branch of the Ontario Securities Commission that: (i) Names the Mutual Fund Organization that intends to sponsor the Annual National Symposia in reliance on this decision; and (ii) confirms that the Mutual Fund Organization has agreed to sponsor the Annual National Symposia in accordance with the Conditions of this decision; and (c) this decision, as it relates to the Jurisdiction of a Oecision Maker, will terminate in that Jurisdiction one year after the publication in final form of any legislation or rule of that Decision Maker wh ich modifies the provisions of section 5.4 of Nl 81·105 in a manner which makes the relief provided for in this decision unnecessary or provides similar relief on a different basis or subject to different conditions. R.B.Bouchard Director The Manitoba Securities Commission
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