Is the current qualification setup here to stay? One adviser who wished to remain anonymous speculates that, with new reforms coming in, some of the things that the RDR introduced could be rolled-back and financial qualifications is one of them. While qualifications will continue to exist, he anticipates the structure will be made a lot simpler.
Sound advice?
The bigger concern is whether qualifications automatically lead to sound financial advice? While the RDR has introduced strict rules for eligibility and the FCA constantly monitors adviser qualifications, achieving level 4 or higher cannot guarantee the quality of advice.
“The qualifications are only a ticket to the disco,” says Tony Catt, an Essex-based compliance consultant. “They do not mean that you can dance, although hopefully some basic moves will have been picked up along the way.”
Accredited institutes such as the CII and the IFP provide the skills and qualifications needed to be an adviser, but it is only through practice that the financial knowledge and advice quality will improve.
And qualifications could be very important. “The financial knowledge of the average adviser is very poor,” says Mr Collyer. “In my opinion about 5 per cent know enough to advise safely – if you don’t believe this figure ask any financial adviser how many advisers they know and then how many they would trust to give advice to their mother, daughter or a close relative.”
So what can be done? Even though advisers agree that in order to keep up with the changing landscape, they need to maintain the highest level of qualification, many point to increasing levels of qualifications as a deterrent to young people entering the industry. Mr Collyer explains that it is important for established advisers to work with clients and other advisers in raising their knowledge and understanding.
The personal finance space in the UK has gone through a number of changes in the past few years with things like auto-enrolment, inheritance tax and changes in pension plans. And it continues to be in transition. As such, demand for financial advice is set to grow and advisers must ensure they keep up to speed.
“You often see complaints from advisers about ever-changing legislation while others say that this keeps us in a job. How can you expect to advise on these without keeping up to date and testing yourself along the way?” says Mr McColgan.
