Step 1 - Get licensed if you aren't already
You must have a valid license to offer insurance and/or securities advice or sell such products to consumers.
Most IFB members are licensed to sell life/health insurance and/or mutual funds. Many hold financial designations, such as the CFP® (Certified Financial Planner), and many are licensed to sell other types of insurance (like Property & Casualty and travel), or to sell mortgages or securities.
If you do not already have a license, you will need to complete the appropriate educational requirements. IFB can help here too! Members are able to enroll at reduced rates to take the prerequisite mutual fund course or CFP® courses. Call our office for more details!
How to get started?
You will need to meet the educational/proficiency requirements for the financial license you want.
You will need to apply for the license, and be approved by your provincial regulator, before conducting any business.
Before you get licensed, you must take the appropriate education and successfully pass the designated courses. We’ve summarized the main steps below, organized by type of license, to help you learn more. Please note this information is intended to be general guidance to get you started and assist in your research. You will need to check with your provincial regulator as to their requirements.
For life/health insurance: the harmonized Life License Qualification Program (LLQP) is the entry requirement for all provinces, as of January 1, 2016. It is offered through various education providers. You will need to register for the course, with an approved course provider, and successfully pass the exams. There are other requirements you must meet before being approved for a life insurance license including your personal suitability, and be sponsored by an insurance company.
The Financial Services Commission in Ontario (FSCO) offers good information on the steps required. Click here to access FSCO’s steps on How to become a Life Insurance Agent or Accident and Sickness Insurance Agent.
Similar information on getting a life insurance license is available for other provinces as well.
Here is a list of all Provincial insurance regulators license life insurance agents and brokers. You should check the insurance regulator, or Insurance Council websites for your province to obtain more information.
For mutual funds: you need to take either the Investment Funds in Canada (IFC) course, offered by the Canadian Securities Institute (CSI) or the Canadian Investment Funds Course (CIFC) offered by the IFSE Institute.
Once you have passed the course work, you must be sponsored for registration with a provincial securities commission through your dealer, and complete a 90 day training program. The training program helps ensure new registrants have received enough training and guidance to understand the industry, the products being sold, and the regulatory environment overseeing the mutual fund industry.
Mutual fund dealers and advisors are regulated by the Mutual Fund Dealers Association (MFDA). The MFDA is responsible for regulating the operations, standards of practices and market conduct of its dealer members and their advisors. The MFDA website has useful information and a list of all dealer members.
For securities (not limited to mutual funds): Successful completion of the Canadian Securities Course (CSC)® is the pre-requisite to becoming licensed (registered) to sell securities. In order to become registered to sell securities, you must also be sponsored by a dealer firm and complete the Conduct and Practices Handbook Course (CPH)®, the Registrant Code of Ethics and Registrant Standards of Conduct courses.
Once licensed, securities advisors and dealers are regulated by the Investment Industry Regulatory Organization of Canada (IIROC). IIROC approved advisors must complete a 90 day training program and within 30 months complete the Wealth Management Essentials Course.
To find out more about what’s required to be IIROC approved click here.
Here is a list of all Provincial securities commissions license registrants to sell all types of securities products (including mutual funds and exempt market products). More information on who needs to be registered and the steps involved is available on the Ontario Securities Commission website, or check your local provincial securities commission.
Step 2 - Obtain Errors and Omissions insurance
If you previously had an arrangement with your employer that included E&O insurance, you will need to obtain coverage as an independent broker. Proof of liability insurance is a licensing requirement in most jurisdictions and often required by the insurers and MGAs/dealers you will contract with.
IFB offers corporate and individual E&O coverage at very attractive rates. For more information on our E&O plans, click here.
Step 3 - Have an insurance contract or be registered with a mutual fund/securities dealer
To be licensed to sell life/health insurance, you must have a contract with at least one life insurance company. These days, most independent brokers place their life insurance business through an agency, often referred to as a Managing General Agency or MGA. Such agencies also have contracts with various insurers and can be helpful to you with administrative tasks and when you wish to offer a client a product with an insurer that you may not be directly contracted with.
The MGA will want to separately contract with you, as an individual broker. The contract will spell out what services they will provide you with, compensation arrangements and any requirements they may have to manage their business risks (such as proof of your license, errors and omission insurance, etc.). There is no regulatory requirement to place all your insurance business with a single MGA, and many IFB members contract with 2 or more MGAs.
Many MGAs have undertaken to support the independent sales channel. Before setting up as an independent, you may want to talk to several agencies to get a better sense of their specific requirements and approach to business.
If you are looking for a list of Life MGAs please visit: https://cailba.com/index.php/our-members/.
*please note that this is not a comprehensive list of ALL MGAs*
To sell securities or mutual funds, you must be licensed and registered as an Approved Person with a specific dealer. The dealer will be either a full service securities dealer and member of the Investment Industry Regulatory Association of Canada (IIROC) or a dealer limited to the sale of mutual funds and a member of the Mutual Fund Dealers Association (MFDA). Either way, you are restricted under the rules of these regulators to placing all your securities through a single dealer. There are also rules related to engaging in ‘outside’ business activities. As an example, selling life insurance is considered an outside business activity which you would need to disclose to your dealer and get written approval.
If you are already with a mutual fund dealer and wish to change dealers, you should be aware that moving your existing clients to a new dealer can be difficult and time-consuming. Make sure you know how this process will work before you take action.
Step 4 - Stay up to date on your compliance obligations
It’s important that independent brokers do not become isolated from the many regulatory requirements required of those who operate in the financial services industry. For example, independent life insurance brokers are required to maintain an Anti-Money Laundering/Terrorist Financing Compliance Regime. Independent brokers cannot be covered under a life insurance company’s compliance regime.
IFB provides workshops, compliance materials and tools to help its members with compliance. We also provide broker tip sheets and decode regulations so you know what you have to do to avoid regulatory penalties.
Step 5 - Set up an independent financial practice
Many IFB members have set up personal corporations or have incorporated their businesses. The advantages (and disadvantages) of incorporating depend on various factors, including your tax situation and expected revenue.
IFB cannot provide you with advice on how best to set up your independent business. We recommend you seek out professional tax and legal advice to ensure you set up your business in the most effective manner.
Below are some links to help you research the various ownership options for an independent business.
Please note: These links are provided for information only, and IFB is not liable for the accuracy of information. Advisors should always obtain professional advice relevant to their own situation.
Government of Canada, Canada Business Network
Blunt Bean Counter
Canadian Federation of Independent Business
Want more information? Browse through our website to learn more about us and why you should belong to an association which believes in the independent broker. If you’re ready to join, fill out a membership application.