If you are an adviser who is employed or running a firm under a major network or national, can you slip under the radar easier than
advisers with no middle or upper management protection?
On the education front specifically, are these advisers more likely to avoid the FCA’s latest move to sure up competency with its backing of the Chartered Insurance Institute’s new exam to re-evaluate knowledge?
Networks and nationals say the Level 4 re-examination is indirectly aimed at smaller independent financial advisers, with many proffering
their own continuing professional development programmes instead.
In order to assess the competency of their advisers, many networks and nationals say they use – and will continue to use – in-house testing, with the main benefit being the option to tailor learning specifically to individual firms. Money Marketing spoke with major firms to determine how often they re-assessed their staff and the processes followed if advisers are seen to be underperforming.
Advisers under the hammer
Both Openwork and 1825 say their advisers are re-assessed monthly, while Hargreaves Lansdown and Prudential Financial Planning formally check competence once a quarter.
In Partnership only re-evaluates advisers yearly but a spokesman says this can be “more frequently where required”. St James’s Place also only formally re-assesses on an annual basis.
Intrinsic and Tenet do not specify how frequently advisers are checked but a Tenet adviser tells Money Marketing they sit separate annual subject validation tests on every product they are licensed for.
Tenet says a “robust programme of knowledge” is broken down into testing modules, while Quilter-owned Intrinsic did not provide details about how its 3,000 advisers are assessed.
An SJP spokesman says its advisers are always monitored on an ongoing basis through business assurance checks and are also monitored by the group’s file management team via one-on-one observations.
On its annual competency test, the spokesman says: “This involves the assessment of [advisers’] technical knowledge, application of knowledge, skills, expertise and keeping up to date with changes in legislation, regulation and products.
“In the case of knowledge, this involves internal accreditation and re-accreditation in the form of online multiple-choice examinations in a similar format to that of the CII.”
1825 national academy manager Marie Calvin says its advisers have a monthly business scorecard filled in by training and competency supervisors about individual performance.
Advisers also sit an initial competency test “across the CII Level 4 syllabus” when joining 1825, from which weaknesses are identified and form part of the advisers’ CPD and development actions they are required to focus on.
A Prudential FP spokesman says its advisers take a two-step re-evaluation when it checks competency quarterly.
He says: “We assess not only our knowledge against our propositions [but] also on regulatory and compliance requirements, along with generic technical knowledge across all product ranges.”
An Openwork spokesman says risk rating advisers on a monthly basis provides an opportunity to flag any recurring problems. He says: “This is based on a sophisticated set of key performance indicators, which provide a richness of data to then more specifically target any activity necessary to ensure advisers remain competent, and where issues linked to an adviser’s competence are identified, an individually tailored development plan is implemented, which supports ongoing competence.”
Tracey Underwood, financial planner, DB Wood
You only have to look at where the complaints lie, and they tend to be with larger institutions rather than small firms. Small IFAs are a minute proportion of complaints, so I doubt the CII exam is aimed at them. As good practice, CPD should be evolving across the industry for everyone, and whether that’s managed internally or externally is down to the business. You can have 10 advisers in the same room and everyone will come up with a different answer on things. IFAs may not have the same structure as larger networks, but networks probably don’t go into every business to see what they do internally.
The in-house testing method
The only firm that Money Marketing spoke with whose advisers will have the option to sit the CII exam is 1825. Despite this, Calvin says the firm expects few advisers will elect to take it.
She says: “1825 will not be making the test mandatory for our planners to complete due to the extensive support and quarterly evaluations we already have in place.”
The firm uses CPD resources from compliance provider Focus Solutions and e-learning site SkillSoft, as well as development solutions from providers Harvard Manage Mentor and Good Practice.
Advisers also attend CPD events run by Standard Life Aberdeen, ThreeSixty Services and the CII.
SJP’s spokesman says its advisers will also continue to use its existing in-house CPD programme, but that the advice giant will continue to review other options.
He says: “CPD activity is provided and recorded through a number of sources such as our learning management system, giving access to accreditation and re-accreditation examinations, remote media and webinars, as well as through the Techlink knowledge management tool.”
An Intrinsic spokesman confirms the network will also consider the test further before deciding whether advisers would benefit from taking it. The network will consider similar re-evaluations launched by other training providers as well.
Money Marketing revealed last week that the London Institute of Banking & Finance is working with the FCA on an equivalent offering.
The FCA has also cited interest in developing equivalents to the CII re-evaluation with any training body interested.
All networks and nationals spoken with confirm their advisers have access to a range of CPD opportunities across the calendar year.
All provide a combination of mandatory and optional testing programmes or events.
CII offerings are also available to Tenet advisers, while Hargreaves Lansdown says its advisers can undertake Chartered Institute for Securities & Investment and Personal Finance Society training at any time.
An Intrinsic spokesman says its advisers use Quilter’s learning academy for a variety of CPD offerings.
He says: “It provides online learning opportunities and resources that advisers can read and be tested on. We also offer numerous workshops, roadshows and seminars, which count towards CPD. Where appropriate, additional training is available for those advisers with specialised qualifications, for instance defined benefit pension transfers. Our field and business assurance teams regularly review advice given by our firms to ensure it is of a high quality and would provide training, coaching and development if necessary.”
Kevin Forbes, principal, Strategic Solutions
Advisers have been subject to many schemes like this. Whereas there can be very little doubt that the tighter regulation has benefited the reputation of advice and improved the quality, some bits are definitely counter-intuitive. I think this has the potential to do that. The CII exam is just another stick to beat all financial advisers with, another increase in costs when we are being so heavily scrutinised on cost, another example to the public of us not being seen to be trusted to do the right thing on our own. It has the potential to be of detriment to the 99 per cent of us that are honest professionals.
Insight for the FCA
The majority of networks that spoke with Money Marketing were in favour of the FCA using the results of the new exam as a supervisory tool to ask firms to re-test specific advisers. Of these firms, only 1825 is considering having its advisers sit the exam, however.
An In Partnership spokesman says it expects the FCA to only exercise its power to call for re-tests on smaller firms unlikely to have “dedicated” training and competence resources.
He says: “I would expect them only to use it with those firms [where] they find a clear issue with the robustness of the firms’ training and competence regime, such as with small directly authorised firms, and not medium and large firms that have dedicated T&C resources that are constantly training, coaching and testing advisers to a high level.”
Tenet group risk and regulatory director Caroline Bradley says the intervention of the FCA should never stretch to removing advisers’ qualifications.
She says: “The re-evaluation test certainly has value as a diagnostic tool or as part of a remedial programme, where widespread knowledge gaps are identified. If it is just a supervisory tool then we don’t see a problem with this.”
Calvin says the responsibility for maintaining competence sits with individuals. She says: “All planners hold the personal responsibility to continue to develop themselves and maintain their professional standing and knowledge individually.
“Therefore, the results of such tests should be used by the individual, who should take ownership of any specific development areas identified. In the event of planners failing to do this, then we support the FCA in taking a rigorous stance.”
An Openwork spokesman says networks with “robust and rigorous” training methods should not have to expect FCA intervention. He says: “Where there is evidence to suggest a lack of adviser competence, or a lack of evidence to substantiate it, then this would seem to be a valuable tool for the FCA to direct advisers to. For networks like Openwork, there are already processes in place.”
SJP’s spokesman says any initiative aimed at improving standards should be welcomed. He says: “Where firms don’t already have the infrastructure in place to support continuous development and deliver excellent and up-to-date professional advice then a move to encourage this can only be a good thing.”
The CII exam is a landmark for the industry
The advantage for networks and nationals is that their risk managers can tailor things to the risks they personally have to deal with in those businesses.
The CII launching its exam is understandable and will be very useful to the industry, but networks and nationals have their own views and themes on how they approach things and it is a big deal to have to then turn around and change a process. If they use certain compliance technologies as well, there will be a contract in place with that firm, so the switch becomes complicated.
The FCA has looked over things with the CII presumably because they have been concerned about the sort of testing happening.
Qualifications are one thing, but putting advice into practice effectively and efficiently is another.
Personalised training and testing or risk statements are more likely to pick up on areas that need addressing than a single annual exam. That is one of the challenges we as an industry need to face.
It’s a sea change to see the FCA working hand in hand with a group like the CII. This seems another case of just making sure all advisers, regardless of where they are employed, are keeping up their best level of service.
Rory Gravatt is a consultant at Altus Consulting