FSA research shows smaller IFAs lead the way on qualifications
Tied advisers and advisers working for banks and building societies are lagging behind independent advisers in pursuit of the qualification levels required by the RDR.
A research report commissioned by the FSA and carried out by RS Consulting in August, found that of the independent advisers questioned about qualifications, 50 per cent held at least one appropriate level 4 qualification. A further 39 per cent were studying for one at the time of the survey while another 4 per cent intended to begin and continue in the industry.
However, only 36 per cent of advisers in banks or building societies held an appropriate level 4 qualification while only 29 per cent of other tied advisers held the required qualification.
Advisers from smaller firms are more likely to already have an appropriate qualification compared to advisers working at larger firms, 61 per cent compared to 42 per cent, and more likely to have already achieved QCF level 5 or 6, 31 per cent compared to 14 per cent. Smaller firms are also more likely to have multiple appropriate qualifications, 27 per cent compared to 14 per cent. The research categorises firms with less than 20 advisers as smaller firms.
The report says: “Interestingly, the smaller firm RIAs were also more likely to cite personal motivation as their main driver to meet the RDR requirements, as opposed to reacting to the requirements of the FSA or their firm, than RIAs in larger firms (49 per cent as against 26 per cent).”
Overall, 21 per cent of advisers currently hold a qualification above QCF Level 4.
The research firm says its research shows there are a number of unresolved questions and gaps in the understanding of the RDR requirements which the FSA should address through “more effective communications”.
It also warns the FSA not to be complacent on a trend towards lower morale in the industry. It says attitudes have become more negative since the 2010 survey with 35 per cent of advisers willing to recommend advice as a career while 12 per cent would strongly discourage someone from entering the profession. This rises to 48 per cent among advisers who will be leaving the industry.
It says: “The FSA, as the regulatory authority, should not be complacent about this trend, which could, if it continues, undermine the future health of the industry and regeneration of the population by dissuading new young blood from entering the profession.”
The research also noted that, apart from advisers who were retiring, 8 per cent of all advisers intended to stop giving investment advice by January 2013.
The report says: “Our survey this year found that just 8 per cent of RIAs intended to cease retail advice after 31 December 2012. Projected departure was for a number of reasons: intention to retire earlier than planned, a switch to an industry role other than retail investment adviser or the intention to leave the industry altogether.”