The Harmonized LLQP will be implemented in all provinces, and will replace the current LLQP.
What does this mean for you?
All Harmonized LLQP students will receive the same CISRO textbooks which will be delivered by approved providers. Business Career College will oversee the certification exam process and offer additional resources to help prepare students for the licensing exams and a career selling insurance products.
Right off the top, there are some good things that should be highlighted:
- If you are already licensed, this will not affect you in any adverse way.
- It will become easier for non-residents of Quebec to obtain certification in Quebec. This will not change the licenses held in any province. There will still be separate licensing in each province, and provinces that have distinct Life and A&S requirements will continue to maintain those requirements.
- The exam process will move to a more fair, open-book style of exam. The old exam techniques that many of you are familiar with (double negatives; confusing language) will disappear.
- All provinces (including Quebec) will use the same exam process.
- The exam will be broken down into four modular exams. The modules are: Life Insurance; A&S Insurance; Segregated Funds and Annuities; and Ethics and Professional Practices. There is a fifth module for Taxation, but it is not tested separately, and will instead be incorporated into testing for all other modules. A student who fails one of the modular exams will only have to re-write that particular module. There will be a separate ethics and professional practices module for Quebec.
- All material, including exams, offered by the regulators is fully bilingual. BCC will not be producing any French-language material at this time. We are not currently an approved provider in Quebec.
- Agents who carry only a life insurance, or only an A&S license, under a current licensing regime, will generally have an easier time obtaining the license that they don’t carry. If you don’t carry your A&S license, you will only have to write the A&S and Ethics & Professional Practice modular exam, for example.
Then, there are the inevitable negatives:
- The cost will increase. The regulator is building an additional cost of right into the pricing. We will collect this and then remit it to the regulator.
- Study Material. While our textbook is currently about 350 pages of content, the new course is approximately 818 pages of content, based on the primary set of textbooks published by the regulators. BCC will offer some material to make this more accessible, but owing to the open-book nature of the exam, students will need to read the 818 page textbook in question.
- At least in the short-term, this will create some confusion. Any student enrolled in the current (old) LLQP will find that they cannot write the new exam after December 31, 2015. That student will have to enroll in the new program and study under the new process. So, if you are currently studying under the old program, you have until the end of December to have passed your certification and provincial licensing exams. In addition:
- If you enroll in the new program (now available) and finish early, you will be able to write the old exam during a transition period that ends on December 31, 2015.
- Failed exam attempts for transitional students do not count against failed attempts starting Jan 01, 2016.
I hope this is helpful. Questions about the transition should be directed to email@example.com.Detailed information from the regulators is available at http://www.cisro-ocra.com/llqp.html.
Ontario has recently passed legislation to bring the Ontario Retirement Pension Plan into existence, and information is starting to become available. There is still a lot of detail to be hammered out; a consultation period is scheduled to begin soon. See https://www.ontario.ca/government/ontario-retirement-pension-plan
At the same page, some numbers are available for ORPP. According to the numbers provided there, a $45,000 income earner can expect to contribute at a rate of 1.9% on earnings between $3500/a and $90,000/a (indexed annually), with the employer matching. (Self-employed are likely not going to be included in ORPP, and those with workplace DB plans will also likely be exempted.) Similarly, a CPP participant will contribute 4.95%, on income between $3500 and $53,600 (2015 baseline, also indexed annually). The employer matches those contributions.
CPP, which has a history going back to 1966 (legislation was introduced in 1965) provides a return on investment (calculated only against the cost of employee contributions) of approximately 3.52%, using the following assumptions:
- Inflation is ignored
- 3.5% discount rate to calculate the value of the retirement income
- Mortality at 90
- Retirement income starting at age 65
- 40 years of earnings (39 would be more accurate given the 17% earnings drop-out, but we'll keep it at 40 to give an apples-to-apples comparison to ORPP)
- Calculated for a $45,000 income earner, one of the test cases provided on the ORPP website
When the employer contributions are added in, the return drops to a paltry .3%, barely a return at all.
Using the same set of assumptions, ORPPs figures indicate that the return will be 5.42% based on employer contributions, and 2.47% based on the combined value of employer and employee contributions.
What does this mean? Is it possible that CPP is so poorly administered, and at such high costs, that ORPP can outpace its performance by such a wide margin? It seems unlikely, especially given that the CPPIB has obtained solid returns (7.1% ten-year return). How much more risk would ORPP have to obtain to generate the promised level of benefits?
Given, CPP does pay out other benefits (survivor's, death, and disability), but those amounts account for only about 22% of the annual payout requirements of CPP.
Unfortunately, not much data is yet available on PRPP and how it is calculating its benefits. And as a resident of Alberta, it is unlikely that my input will be welcomed into the consultation period. (I already wrote the sponsoring MPP's office one letter about the plan, and have received no response to date.
Thanks for reading. If you have questions or information, please e-mail me at firstname.lastname@example.org
Back in August and September, I sent out a couple of Survey Monkey survey results. These surveys were designed to help refine the FPE 2 (now CFP) Exam Prep process.
I sent two separate surveys, one to those who had failed FPE 2, and a slightly different survey to those who had passed. I sent it to BCC students who wrote the exam in the previous 12 months.
I received 10 responses (out of a possible 19) from those who had failed, and 23 responses (out of a possible 32) from those who passed. My first concern out of this is that the students who had the most to gain (those who have failed) also responded at the lowest rate. Both surveys had an identical number of questions and required a similar time commitment to complete. For the 9 people who had failed the exam, and did not complete the survey designed to help them improve their results, I am left to wonder.
I would like to thank everybody who participated.
Some key results from the surveys:
-most failing students identified a large time commitment towards studying. 3 respondents committed over 300 hours, and 3 more committed between 100 and 200 hours. Only one person committed fewer than 50 hours. Of the passing students, most (30%) put in 51-100 hours, with a pretty even distribution across the other possible answers. (0-50; 51-100; 101-200; 201-300; 301+)
-the primary resources used by the failing group were the two free FPSC practice cases, the BCC practice exams, the core curriculum texts, and supplemental readings. Study resources used among this group were pretty evenly distributed. For the passing students, they reported a higher degree of use of the FPSC practice exam, a higher degree of use of the BCC practice exams, and a lower degree of use of supplemental readings. I will be revising my practice exams in response to this question. FPSC and I agree that good practice exams are the best way to study.
-half of the unsuccessful respondents identified that they had crammed in the 1-2 weeks prior to the exam. I try to discourage this method of study, as I find it harmful and stress-inducing. For some reason, only 6 of the survey respondents answered the question about when they studied. On the passing side, results were pretty evenly split. Half of students did regular study based on the 90-day schedule. Slightly less than half left all their studying until the last couple of weeks.
-the next question asked about why candidates felt they were unsuccessful. Half identified that they ran out of time. 3 of those ran out of time due to reading, and 2 indicated that writing was their challenge. Two didn't know how to answer the questions, and two were surprised at exam content. One had mitigating (non-exam) circumstances. This is probably the most useful question for my purposes. Running out of time is a common problem with this exam.
-I posed a different question to those who did pass. My question here was "Which do you think describes the primary reason why you passed". Almost half owed it to knowing what to expect, which is probably linked to doing lots of practice questions.
-I then asked students if they would pass the exam if they wrote again tomorrow. Respondents from the failing group were evenly split on that answer. More than 90% of respondents from the passing group answered in the affirmative.
-The next question asked which Capstone students had completed. 4 of the unsuccessful students did ours; 6 did the Advocis course. I have a belief that a positive experience on the Capstone course leads to success on this exam, but I wanted to ask some questions to either reinforce or dispel that belief. On the passing side, almost 40% had done ours, with an even distribution (around 10%) of other available options, except that 30% had used the Advocis course.
-The final question posed was about the quality and value of the Capstone course. Half of the unsuccessful group of respondents identified that the Capstone course was of value for both their practices and for exam prep. The passing group actually answered this question very similarly.
I hope that nobody is bothered by my language in this post. It's hard to use words like 'failing' and 'unsuccessful' without sounding negative.
I am not surprised, but no 'magic bullet' revealed itself here. This exam is supposed to be challenging, and it should not be something that you can guarantee a pass on by doing steps A, B, then C. It is a very personal experience, and what works for one person may not work for another.
For those who are done with the exams, thank you for participating. For those who are still working on them, I hope that this is helpful.
We are just over a month away from the CFP (former FPE 2) Exam.
I hope that studying is going well.
You should be using the Competency Profile. I also strongly recommend using all the practice exams provided by FPSC, both free and paid.
For those attending exam prep, there are three practice exams available. We will be doing these as a review in class. Unlike previous years, I will be putting individual students on the spot. I will be asking you to share your answers (one student at a time) to a question, and then we will pick those apart. If you show up to class without the questions all answered, you will find that you will not get a great value for your dollar or time.
I will, over the next week, be working on updating a few of the questions. If you answer an older version of a question, that is fine. We will use whatever version you answered for our in-class review.
Best of luck and enjoy your ongoing studies.
I have completed a somewhat detailed analysis of the results of all BCC students who have written either FPE 1, FPE 2, or both in 2013 or 2014.
During that period, BCC has put 130 students through some sort of exam preparation in one way, shape, or form. Not all of those students are necessarily represented in the numbers here.
Here is what I am able to determine:
1. BCC students have written the FPE 1 exam (now renamed as the Level 1 Exam) 73 times. 66 students have passed it, representing 90.4% of students.
2. BCC students have written the FPE 2 exam 89 times. Of those 89 attempts, 56 were successful. 33 times, exam writers were not successful. Of those 33, 9 came back to write a second time, and were successful on the second attempt. Those 9 are included in the 56 figure provided above. That represents a 62.9% pass rate.
3. Of students who specifically attended an Exam Prep:
-88.7% of FPE 1 Exam Prep attendees passed that exam.
-67.1% of FPE 2 Exam Prep attendees passed that exam.
I found the exercise interesting. I am working to refine our FPE 2 (now CFP) exam prep, but I am not sure that it's realistic to get FPE 1 results much better than that.
Best of luck to those who are preparing for any of the exams leading to this designation.
I am happy to share the raw data (less any student identifiers) that went into this analysis.
CERTIFIED FINANCIAL PLANNER®
The CERTIFIED FINANCIAL PLANNER® or CFP® designation is one of the premier financial services designations. CFP professionals are held to a high standard; candidates must complete an approved certification program, work experience, rigorous testing and adhere to ethical commitments. Continuing education requirements help to ensure that CFP practitioners keep up with the regulations set out by the Financial Planning Standards Council.
Business Career College offers a CFP Certification Program, which includes our own FPSC-approved Capstone Course and exam prep seminars. Our goal is to provide our students with the instruction and assistance along the road to their designation. We have classes running Canada wide with new rotations starting in Edmonton this September and in Calgary and by live webinar in January 2014.
CFP®, CERTIFIED FINANCIAL PLANNER® and CFP Logo® are certification trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planning Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB. All other ® are registered trademarks of FPSC, unless indicated. Business Career College does not certify individuals to use the CFP, CERTIFIED FINANCIAL PLANNER and CFP Logo marks. CFP certification is granted only by FPSC to those persons who, in addition to completing educational requirements such as offered by Business Career College, have met the ethics, experience and examination requirements.
The Wealth Designation - By Kelly Brewer, BA, EPC™
Advisors dealing with high wealth clients will want to consider the Chartered Life Underwriter® designation. The CLU® builds upon CFP® certification education program with a focus on estate planning and wealth transfer. According to The Institute™ "the CLU designation provides the education needed to differentiate one's practice in complex wealth and estate-transfer markets placing CLU designation-holders in the unique position of helping Canadians build and preserve wealth."
The CLU designation program consists of Pre-requisite Learning and the Foundational Education Program. The Pre-requisite Learning consists of Courses 231 through 234, which also make up the Advocis® core curriculum for the CFP® certification education program. Therefore, candidates holding a CFP® designation are given exemption from the Pre-requisite Learning Courses. Candidates holding an accounting designation (CA, CGA, CMA, CPA) are also given advanced standing and do not have to complete the Pre-requisite Learning. Holders of these designations are also able to challenge the exam for Course 235, the first course in the Foundational Education Program.
The Foundational Education program is made up of Course 235: Advanced Taxation, Course 236: Law and Course 237: Advanced Estate Planning. Course 237 consists of two assignments and a cumulative (Course 231-237) final exam. The final exam is held by Advocis twice a year.
Business Career College has great options for advisors interested in completing their CLU® designation program.
For Pre-requisite Learning students have the option of live instruction or directed learning. Each method provides students with their course, materials, quizzes and exams. Live instruction students will have the benefit of four days with Jason Watt, CD, CLU, RHU. Directed Learning students will receive access to previously recorded webinars that can be reviewed at their own pace.
The Foundational Education Program is offered in a slightly different manner. Students will register into their courses through Advocis® which will provide their course, material, quizzes, assignments and exams. Business Career College offers live instruction classes that are designed as a supplement to the Advocis® materials. Live instruction is available for Courses 231-237 and help students prepare for their quizzes, assignments and final exams. They are an excellent way to make the best use of study time and give students a great chance for success.
Chartered Life Underwriter®, CLU®, the CLU Logo®, Certified Health Insurance Specialist™, CHS™ and the CHS Logo™, The Institute™ and The Institute for Advanced Financial Education™ are trademarks of The Institute for Advanced Financial Education™. The Institute™ is a wholly owned subsidiary of Advocis®. Advocis® is a trademark of The Financial Advisors Association of Canada. Elder Planning Counselor™ and EPC™ are trademarks of The Canadian Initiative for Elder Planning Studies.
By Jason Watt, CD, CLU, RHU
In my last article, I wrote about the proposed tax measures introduced in Budget 2013. We have had some significant developments with regard to both those sets of measures, and to the changes to the Exempt Test proposed in Budget 2012.
On the 10/8 front, it appears that the government is going to proceed with its plan to put a stop to the deductibility of interest and the application of a Capital Dividend Account (CDA) credit where there is a fixed relationship between the insurance policy and the loan. Rather than a December 31st drop dead date for exiting these arrangements, the government is giving taxpayers until April 30th of 2014. The more significant development is that at least one insurer has introduced a policy that seems as though it will allow the 10/8 arrangement to continue, but under a new policy. This policy will de-link the policy from the loan, allowing a sort of ad hoc 10/8 arrangement. It actually appears that this will result in a loan with an interest rate of around Prime+4 and a policy with cash values growing at a rate of around Prime+2. For those who have clients in 10/8 arrangements, this is probably good news.
It appears that no substantive opposition was mounted to the end of leveraged insured annuities. Existing arrangements are grandfathered, with the understanding that no further deductibility applies to any new lending arrangements.
The changes to the exempt test that were proposed in Budget 2012 are now en route to becoming law. The exempt text changes are as originally expected. However, there are two further changes in the same section of legislation that will have impacts. The first is that the Insurance Investment Tax (IIT) on level cost-of-insurance universal life products will be increased. This will likely result in a modest premium hike sometime in 2014 for these products. This fixes a long-recognized deficiency in the taxation of these products. The second change will affect planning concepts that rely on a combination of a decreasing death benefit with a yearly renewable term universal life insurance policy, followed by a collateral loan against the cash values to fund retirement. These arrangements are variously known as ‘insured retirement plan’; ‘insured retirement concept’; and ‘insured retirement strategy.’ In all cases, the maximum tax actuarial reserve (MTAR) limit will be based on the lowest death benefit associated with the policy, not on the death benefit at the time the policy is issue. For the more aggressive applications of these concepts, this is going to have an impact. Existing arrangements will be grandparented.
On a different note, we are well over 300,000 views on our YouTube page, and also over 450 subscribers. The videos are designed to help those pursuing all types of financial services exams, and there is some good, general, refresher information there as well. Some interesting statistics that are drawn from the Google Analytics function are:
- 10,800 videos watched from Oct 13 to Nov 11;
- 56,656 minutes of videos watched;
- The life insurance needs analysis videos remain our most-watched videos;
- 94% of pages are watched in Canada, but the US, UK, Philippines, and India round out the top 5.
- 52.5% of views are by males; 47.5% of views are by females.
By Bob Watt, EPC - President & CEO
Welcome to this first edition of the “Watt’s What" column in the Business Career College email newsletter sent to our clients and other interested readers. First, let me tell you a little about the author and where the title comes from. This segment is written by Bob Watt, President, CEO and founder of Business Career College. Bob has a little over 31 years of experience in the insurance and financial services industry, having spent time as an insurance and mutual funds sales rep, specializing in dealing with families and working small businesses to provide employee benefits. Bob’s career spans stints as an agent, administrator, manager, agency owner and for the last 16 years as an educator. His travels take him across Canada and he has been blessed to establish many long term relationships and connections with people from all aspects of involvement in the financial services industry. Those contacts and the habit of following industry events and trends on a daily basis will serve as fodder for this column.
As a first point that may be of interest, insurance councils and commissions across the land under the umbrella of the Canadian Insurance Self-Regulatory Organizations (CISRO) are making some changes to the Life License Qualification Program (LLQP) process with an implementation goal of September 2015. When the LLQP was introduced in 2003, the provinces and territories that opted in included all provinces except for Quebec. In an effort to keep LLQP current, the regulators have been struggling to with ways to maintain the credibility of the program and to ensure that it meets the needs of the Canadian insurance industry. The end result is that Quebec which stayed out of the LLQP program are now going to come into the fold, allowing the industry to end up with a truly harmonized LLQP. In the end we should something that will be easier to keep current and perhaps even a simpler and less daunting exam for entrants to the insurance profession.
We continue to see the trend towards “bigger is better,” perhaps a myth, but it is happening. Many of the large national MGAs are swallowing up or merging with mid-size companies. We will see fewer organizations on the marketing side just as we have seen many of the insurers disappear over the years. It seems to be part of evolution and our industry, just like any other, has to go through these changes. Let’s hope that these changes do not ruin our industry and don’t result in the old traditional insurance agent becoming a dinosaur.
People on the move – The only move of significance that we can report at this is that our long-time friend and successful insurance veteran, Jim Ruta, has left the world of the self-employed and has joined Life-Assist. The good news is that Jim will still be as active as ever, travelling around the world helping insurance and financial advisors achieve success and build their practices. Luckily, Jim will continue his regular contributions to Investment Executive with “Ruta’s Rules” video segments. If you haven’t done so, check it out and you will find lots of interesting facts and perhaps even learn a few strategies and ideas that will help you in your business.