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Alistair Cunningham: Chartered status has been cheapened

Alistair CunninghamI was one of the first to be granted chartered financial planner status, but I wonder what the future is for the accolade. The Personal Finance Society does not seem overly concerned about erosion of the title, seemingly allowing its abuse with impunity.

There have been high-profile incidents of more than one chartered financial planner involved in poor advice. In one case, the clients in question (many of whom were left thousands out of pocket) did everything that could have been expected of them, seeking advice from an ostensibly independent, fee-charging chartered financial planner referred to them by friends or found and validated through Unbiased and the FCA Register.

There have also been accusations that the chartered financial planner status at company level is of little value and too easy to obtain. I have to disagree with the first point, as many discerning consumers only want to deal with chartered financial planners.

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That said, this is often to the detriment of independence, weakened through Mifid II.

Unfortunately, I feel there is scope for worse outcomes in seeking advice from a restricted chartered financial planner than an independent financial adviser with the client’s best interest at heart but fewer exams.

As to whether it is easy, that depends on whether you have a predisposition to exams or a preference for study that reflects real world skills. I like to think I have both, but the individual chartered financial planner status could be achieved with no actual financial planning skills.

I achieved mine through examination and, until it was subsumed into the Chartered Institute for Securities & Investment, I was a member of the Institute of Financial Planning. The IFP was where real financial planning was done. It has since been a small part of the CISI agenda and I have cancelled my membership.

Chartered status is further cheapened where claims are made to hold the accreditation, even implicitly, which are not true. We can give firms that do this the benefit of the doubt and assume they do not understand the rules; after all, they may have several individuals that are chartered. But they should not describe themselves as chartered financial planners.

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There are also firms incorrectly using just the word ‘chartered’ in their name. This seems even more bizarre, as Companies House forbids it, unless permission is granted by the professional body. Given chartered’s ephemeral (annually renewed) status, have they requested and been granted permission, or is this a Companies House issue?

Perversely, the FCA does not have chartered on its list of sensitive names, so one assumes it is content to let a firm use it even if it is misleading.

I have highlighted this to the PFS but it seems no action has been taken. It makes a mockery of the process I go through each year; not least because of the time and cost of recertifying, and the requirement to have non-customer-facing staff with Chartered Insurance Institute membership. In the case of those misleading consumers, what hope is there for the advice they give? If an adviser is not willing to be clear before engaging with clients, there can be little hope afterwards.

We should be protective of this status as we would the similarly abused term IFA. There are no guarantees but these terms used in the spirit they are intended should be a benchmark of quality.

I feel we have the worst of both worlds: a brand pushed as ethical but misused by those least deserving.

Alistair Cunningham is director of Wingate Financial Planning


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There are 20 comments at the moment, we would love to hear your opinion too.

  1. Very interesting Alistair. As a Chartered Financial Planner for many years, and operating as an IFA, I agree with much of what you say.

    The status is given very little publicity by governing bodies, so that in the eyes of most of the population one financial adviser is the same as the next. That’s not really what I signed up for when studying for the extra qualifications.

    A bigger worry though is that many non-Chartered financial advisers see little to be gained by getting the additional qualification. That’s a shame as we should be striving for greater professionalism and expertise in our industry.

    I’d be interested to know what you believe we can do to change this situation.

  2. Some fair points. However like you I was also a CFP at the IFP by examination and became Chartered through CISI (My goodness what a lot of initials!) However I don’t entirely agree with your criticism of CISI. I do find that they have several events that are pure financial planning and CPD (even for those of us semi-retired and no longer regulated) is both mandatory and well administered and overseen.

    AS to some of your other points I think some of them could be quite easily addressed.

    No chartered status to be granted to anyone other than independent (Do I hear howls of protest?).

    No accrediting firms with chartered status (a money spinning ploy by the PFS) only individuals via appropriate examination, experience and satisfactory credentials are to be admitted as chartered.

  3. An individual adviser can be qualified up to the eyeballs, but if he or she is not straight or lacks common sense, which is absolutely not automatically correlated with intelligence, bad outcomes will result. A couple of years’ back I was at a dinner where a highly qualified young man living something of a jet-set lifestyle expounded on how he charged DB transfer clients “as much as [he could] get away with”. I’ve long thought that there should be a pure ethics exam. No technical stuff on regulation like RO1, just the ethics component of it. Those who fail it should be ineligible to ever be an advisor. I do not believe ethics can be taught to adults. If an individual has reached a stage in life by which he or she is technically qualified to advise but cannot pass the ethics test in one sitting, then he or she is never going to be fit to be trusted with other people’s money.

  4. A great deal of effort was put in by the Board of the Society of Financial Advisers (and others)in 2004 to get Chartered status for the adviser community. It would be a real shame if that effort, after gaining some real traction, was devalued in the future by poor standards and behaviour by a few.

    As others have said here Chartered status isn’t just about exam qualifications it is about standards of behaviour and ethics.

    It is always going to be the case that a few will mess it up but that should not reflect upon the rest.

    It may be of little comfort that at anyone time there are said to be more lawyers in prison than any other profession. I wonder if the legal profession beats itself up much about this?

  5. Nicholas Pleasure 7th December 2018 at 2:18 pm

    The problem for me with Chartered Status was that it involved a lot of study that had little to do with my day to day work.

    Also the CII has history here. In the 1990’s I studies really hard for my AFPC and joined SOFA and this was seen as the pinnacle of professionalism. After a couple of years the CII got bored of that and decided a few more exams would earn them a few more quid.

    My AFPC was downgraded to less than the new diploma. That’s the trouble with having a professional body that doesn’t act with much in the way of ethics itself.

    For me SOLLA has been a much happier home. No new exams but a two hour viva where they can easily sort the wheat from the chaff.

  6. I disagree with your comment about restricted CFP’s. Just because they are restricted it does not mean they do not have the clients best interest at heart. I think you are more likely to get a better result the other way.

  7. I would agree that qualifications, no matter how illustrious, are by themselves no guarantee of best outcomes. But these qualifications when accompanied by commercial nous and ethical behaviour are the best of all worlds.

    I do often think that those who gainsay qualifications are either incapable or too lazy to acquire them.

  8. Being part of the first graduation ceremony at the Guildhall was a proud moment, it was an exclusive club. Now almost anybody can join and I do believe that Chartered status has been diluted.

    However, it is still a useful filter to direct consumers to qualified advisers, but no guarantee of impartial, client focused advice.

    Some still use the title to justify their high charges,but that is not confined to Chartered advisers, there are still many who see a lavish lifestyle as an entitlement for being successful salespeople, a culture still favoured by some firms.

  9. ‘Whites of their eyes’ is more regarded by many Clients rather than any initials, I have found.

    I believe that Ethics is more to do with Nature than Nurture.

  10. I am a Chartered Financial Planner who was amongst the first tranche when the qualification was introduced in 2005. I subsequently had a break from advising and I am now on the point of return.

    However, that return will be in a restricted advice arena. The reason being that my first port of call would have been that of an IFA. However, what I found was that the IFA vacancies required you to have a client following. As I had been out of the business for a while I didn’t have a client following which made me unattractive as a potential new employee. In addition they were looking for recent Competent Adviser Status which I have had in the past, but not in the timescale they were looking at.

    As such I was caught in a catch 22 situation where I couldn’t meet the criteria they were looking for. As I need to make a living I decided to take advantage of a restricted adviser vacancy which was made available to me.

    I had to think long and hard about accepting the role. However, I feel that with my knowledge I can still do a good job for my potential clients because the product selection is the last step in the advice process. In addition a lot of client’s needs can be solved without the need for a product sale by just re-arranging the existing plans without the need for a further product sale.

    In an ideal world I would have become an IFA. However, the world is not an utopian place and needs must. I can live with myself whilst offering a restricted advice service “Unfortunately, I feel there is scope for worse outcomes in seeking advice from a restricted chartered financial planner than an independent financial adviser with the client’s best interest at heart but fewer exams.”


  11. My comment posted before I had finished (fat fingers). I was going to conclude by saying that I will endeavour to give my potential clients best advice using my restricted palate of products.

  12. Interesting …..

    On reading the article and the following comments, I do wonder if one has a self inflated ego ?

    Surely the the only people who may or have a right too cheapen ones academic achievements and indeed their prowess as an adviser are their clients, I don’t really subscribe to the validation of industry peers or the amount of letters one has after their name as a basis of their questionable greatness ?

    I (for the record) am not chartered …simply; I don’t need to be, not because I am academically challenged,lazy or indeed wanting validation as I walk into the next PFS meeting displaying all my merit badges on my chest.

    Who/what really matters here ?,your over inflated ego, the various professional bodies, the regulator or perhaps we should close off the Mall and parade you down it, people lining each side cheering, whistling, and waving flags …….

    In 27 years I have only got asked once if I had chartered status, I replied no and asked the prospective client why he had asked, “it was on a list of questions I got from a website to ask your adviser”…….

    So I ask are these exams client focused or….a money making scheme from said exam bodies, validation to increase your charges, or just an excuse to have letters after your name…. seems to me 99% of the general public don’t have a Scooby Doo what they mean….Hilarious it really is PPpfffttt !

    Remind me again… why have my FSCS levies just increased again this year and why am I getting a interim levy on DB transfers ?
    Highly qualified advisers ?

  13. Well said DH. I have come across numerous “Chartered” advisers who to be honest need another 10 to 15 years in this game to come anywhere near a lot of the “non chartered” advisers I know.

  14. One good thing about the FCA register, and why it is essential advisers are on a public version of it even if they are no longer approved persons post SMCR, is you can get a very good idea about the ethics and competency of someone looking at the firms they have worked for and the time spent there. It’s also useful for rooting out those with undisclosed gaps or jobs on their CVs. It’s less useful to consumers who won’t know firms, track records etc… but employers,partnerships and networks should be more thorough at screening these people out and not overlooking technical,compliance and ethics shortcomings because the person can “sell.”

  15. Like learning to drive, just because you have passed your test, does not mean you can drive or ever become a good driver. Much of what is stated applies to advisers in general.

    Experience is always key, honesty paramount and a good work ethic. Willingness to put the hours in and not take the short cuts.

    The issue as always is ethics, which you either have or do not.

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