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Big Mac and sighs

Gregor Watt, Deputy editor, Money Marketing
Gregor Watt, Deputy editor, Money Marketing

Mark Hoban will not have been winning many new friends in the IFA industry with his recent pronouncements on the level of adviser qualifications.

In a Parliamentary debate on the RDR last week, Hoban said: “The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonald’s. The products being sold by IFAs are infinitely more complex and long lasting in their effects than a Big Mac.”

Several commentators have suggested that his comments sound like they were designed to be deliberately provocative but despite the risk of my name joining Nic Cicutti’s on the list of least favourite MM columnists for some of the readership, the heart of what Hoban said is correct. The old FPC, three-part exam is a QCA level three exam, as is the basic shift manager course that McDonalds can award its staff.

In addition, the fact that it is possible, for now at least, for a new entrant to the industry to advise on complicated products, with potentially hundreds of thousands of pounds at stake with the academic equivalent of an A level is, from an objective perspective, far too low.

For an industry that is trying to establish itself on a par with accountants, lawyers or engineers as a universally recognised profession, the
basic level of qualification has to be increased.

The argument surrounding grandfathering is an entirely different matter. A lawyer, specialising in pensions, for example, may have qualified in the 60s, 70s, or 80s but this is no reason to prevent them from practicing now even though pensions legislation has changed beyond recognition since then.

Just over a year ago, Peter Hamilton QC wrote an interesting article in Money Marketing on the subject of the legal standard of competency for any job. His opinion is that in all walks of life you are expected to carry out your responsibilities to the standard of an “ordinary skilled man”.

Any increase to the minimum qualification for new entrants would automatically increase the legal standard for an ordinary skilled man and force existing practitioners to be able to demonstrate they can match this standard. Therefore, is forcing the blanket adoption of new formal exams actually necessary?

From my own experience, the exams I have taken so far, CF1 and CF2, were not a particularly difficult hurdle to clear and I would expect someone who was advising me professionally to be able to demonstrate knowledge far in excess of this general level.

From the little study I have managed so far, the RO exams for the diploma are a big step up in difficulty but by next month I hope to be able to report back with some objective evidence of one of the exams.

Gregor Watt is deputy editor at Money Marketing and is writing an exam diary of his attempts to reach QCF level 4

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Gregor,

    Your comments regarding the basic level of qualifications are correct – the bar is too low and their effectiveness is limited. The fact that you, as a non-practicing (but interested) observer, finds the CF papers to be “not particularly difficult” speaks volumes.

    Whilst I accept to a certain extent your point about historical qualifications in other professions and whether they are relevant for advisers today, the point that you miss is that the basic entry level qualification in those professions, even historically, was / is much higher than the one that exists in the IFA industry today. The overwhelming evidence over many years is that, in general, a better qualified workforce is a more competent and capable workforce. In addition, in general, most people who take the trouble to obtain a decent minimum level qualification will be more likely to keep up to date with changes in their chosen field.

    Now that the new “dumbed down” RO exams are available there can surely be no excuse for advisers failing to meet what is still a fairly low competency hurdle.

  2. IFAs’ have less than 2% complaints old boy – where is your evidence that the model is broken? Go out and ask the consumer what they thinks about solicitors and their service level before we rush to emulate them!

    PS an under cooked BigMac can kill you!

  3. I agree that the basic entry level qualifications are far too low and Alan B makes the relevant point that accountants and solicitors are expected to reach a much higher and exacting standard before they are qualified. I appreciate that for those who have not sat an exam for many years, the prospect is daunting – but no one can argue that they didn’t know. The requirement to prove knowledge has been building for almost 20 years; I sat my first financial services paper in the early 90’s. Waiting for some form of grandfathering amounts to burying one’s head in the sand and hoping the whole thing will go away. It will not and should not. There is still plenty of time (just if starting from a low base) and lots of assistance from providers. Grandfathering is not the answer.

  4. My apologies to everyone who already knows what follows; and even greater apologies if the position has changed (although as far as I know it has not), But this whole debate about what the man Hoban said is founded on a misunderstanding of the position as far as I can judge.

    A few years back I had occasion to speak to the QCA as it was then; it concerned the difference between certificates and diplomas and to cut a long story short I asked if their assessment of the CII diploma was in the public domain and if so could I have a copy of it. I was advised that no such assessment existed or had been undertaken or was ever undertaken and that the criterion as to what constituted a certificate and what constituted a diploma was how many hours study the exam organisers felt was necessary to pass the exam.

    Thus Mr Hoban’s analogy is fatuous and as a matter of interest he could have compared the insurance certificate with that available to a sheep shearer or a keeper of tropical fish; if it was just in the number of hours McDonald’s people have to study that may have been justifiable. But as I understand his comments, he was seeking to draw some form of intellectual comparison and this was just plain ignorant. For Gregor to suggest that his remarks were justified is therefore nonsense.

    For the umpteenth time I should stress that as a certified financial planner I have no personal axe to grind in this matter.I do however agree entirely that grandfathering plus cpd is the sensible way forward.

  5. The comparison assumes that the desired end result is a level 3 qualification.

    Here lies the problem with your whole debate.

    Clearly when Mcdonalds management ‘shift manager’ module takes 85 hours yet the CII qualification takes 280 hours plus exam time, the prime purpose of the qualifcations was not to achieve a level 3 academic qualification as this could be achieved elsewhere more quickly.

    I think that the easiest thing for everyone to do is stop, go and read the countless NHS reports on the subject, many of which refer to another 20 or more papers in their introductions and then understand what various types of qualifications are designed to deliver and what their outcomes are.

    Then people may begin to understand why the medical profession went down the grandfathering and CPD route to professionalism.

    They too had many people of a current similar age to practising IFAs who they grandfathered over.

    They deal in life and death, their findings were scrutinised in fine detail and discussed with universities, professors etc.

    There must be value in following their lead.

    I think Gregor will find the qualifications ‘easy’ because he has interest in them and those particular ones are well written and informative.

    As for ROs being dumbed down!! That is a laugh.

    Top notch focussed updated CPD with tests online is the way forward, even allow the FSA a small section each year, 10 hours or so. The total needs to be 50 hours plus min.

  6. @ Ron: Have you ever thought that if you devoted to your studies the time you seem to spend reading NHS reports around CPD, you’d be well on your way to level 4 already?

    As for online tests, what the hell would that prove? I worked for a number of years in the technical department for one of the big life offices and sole traders who were part of a network used to call me up on a regular basis to answer their pensions questions when they were doing their ongoing assessments!

    Like it or not, exams are the best way to provide technical competency. With that in mind, grandfathering should not be an option.

  7. Simon Mansell on Right Brain Apartheid 3rd November 2010 at 5:36 pm

    A short while ago I asked for feedback on the level 4 from a large number of IFAs’ and I also embarked upon my own review. I thought you might find my thoughts of interest, if not then just click delete.

    In the end this came down to a CII V ifs debate and at the time the only CII option was the JO exams. I’m decidede that the CII approach did not suit me as don’t welcome an “average results lottery”, where no more than 5 in 10 IFA’s pass and in some cases a much lower number! The two-month wait for results (with the 2012 deadline pending) is a disgrace. The CII fees even for past papers are sheer
    profiteering. Perhaps even more so I do not feel the CII is in kilter with modern educational theory. I do however fully respect those that
    have worked hard and achieved a result via the CII approach. I take my hat off to them but will fall short on offering them my clients, which I
    feel is the motive behind some of the New Model types who demand yet higher qualifications hoping for clients that they could never otherwise earn!

    I have looked at modern study technique and even discussed this with a professor client of mine. I conclude that a pure exam based course is out of kilter with modern educational theory and does not reflect the type of study you will find in many universities, even though level 4 is compared to first year degree study!
    This may of course be because the CII JO exam are not a reflection of level 4 requirements.

    Hoban does not know what he is talking about with his jibe which is an equal insult to McDonalds who have taken to training their own staff because the state does such a poor job..

    Mr & Mrs IFA you will find in most
    cases 1st year degree study far easier than the CII JO exams. 100% exam based study measures 100% exam based study and gives the wrong impression as to what a pass is actually measuring.

    Exams give an advantage to those with left brain thinking to the disadvantage of IFA’s
    who are more often right brain active.

    It is right brain skills that have made the IFA’s the most successful distribution model, using these skills to work with clients, building
    relationships, developing mutual trust, having an emotional affinity and helping clients make positive decisions to move forward in their
    financial lives rather than look to the state to provide. Hoban is a left brain accountant and a bean counter and he will never understand these issues.

    It is a fact that these skills are so rare and so important that in the past a premium has been paid to those who succeed where many fail. Interesting then that commission is also under attack! In the course of my life I have met many technically brilliant individuals who lack the
    interpersonal skill to work with and help clients. It is these individuals who normally end up in support roles.

    Those who can, do; those who can’t, teach. Those who sell, sell; those who can’t, support
    those who do. Why then are these right brian skills also not also being tested by the CII? It is because institutions are dominated by left
    brainers who have no concept of relationship building and related right brain skills. Regulators are also dominated by such people.

    However, nature dictates otherwise. The right brain is the master, the left brain the servant – it should never be reversed. Right brain
    entrepreneurs, lacking in left-brain skills can easily employ left-brain technicians but would a left-brain have the vision to employ a right
    brain? No never – see how Hoban seeks to destroy those he fails to understand. It is perhaps the left-brain world, fearful of their lack of creativity that has suppressed right brain thinkers and now they conspire to take over the right brian dominance of independent advice.

    Fortunately, a few IFA’s will transcend this apartheid and rise to assert their true dominance. Consider the many right brain visionaries heading up industry surrounded by left-brain technicians capable only of
    translating the vision. Both are important and both need each other.

    Perhaps even the rise and fall of any society can be linked to the conflict between the two “modes” of thinking and certainly the fall of
    independent financial advice! Look at any failing business or institutions (often evidenced by state intervention, local government
    and regulatory intervention), where left-brain dominance is the order of the day! The FSA being a classic example!

    Right Brain Apartheid

    Most individuals have a distinct preference for one of these styles of thinking. Some, (very few) however, are more whole-brained and equally adept at both modes. In the past society and in particular academia operated a right brain apartheid favouring left-brain modes of thinking, while downplaying the right-brain ones. Right-brained subjects, on the
    other hand, focus on aesthetics, feeling, and creativity. The ultimate tragedy of this approach is as Oliver Wendell Holmes said:

    “That many people go to their graves with the music still in them.”

    This could be the ultimate tragedy for independent advice if we fail to make
    this point.

    Discussion
    Experimentation has shown that the two different sides, or hemispheres, of the brain are responsible for different manners of thinking. The following table illustrates the differences between left-brain and right-brain thinking:

    Left Brain

    Logical
    Sequential
    Rational
    Analytical
    Objective
    Looks at parts

    Right Brain

    Random
    Intuitive
    Holistic
    Synthesizing
    Subjective
    Looks at wholes

    This is not an absolute and not meant to be disrespectful of the many long hours that CII candidates have worked. What I am saying is that whole brain learning is what should be tested. The CII JO approach does not
    measure or reflect much of what an IFA does day to day. This is why 100%
    exam based study is discouraged by many new curriculum standards which
    balance course work and self study. The object being to specifically emphasise the importance of deep understanding over the mere recall of
    facts, which is seen to be less important.

    Advocates of the CII traditional education may of course criticise this approach but I can only reflect what I feel to be the correct approach
    for me. By the way the CII would not give me a single credit for my law degree because they said it had been taken more than ten years ago! I resigned from the former (LIA) PFS following the CII take-over of the
    once great LIA. I believed this to be a left brain take over of a once fine right brain institute.

    After the take over we lost the sales, the
    concepts, the personal development and the goal setting. We lost the practitioners speaking out of experience and only gained the technical
    boffs speaking out of text books. Once you start to see the world in these ways much of what we face can be explained by Right Brain
    Apartheid.

    Best regards

    SIMON MANSELL BA(Hons)Law

  8. Other than the issue of commission changing to adviser charging which I believe in as it is simply removing provider influence (where I already work on it for lump sum investments, but see a problem for regular savings and protection, I think some advisers will not be ready by 2013 and so the solution for me is a slightly longer lead in), I agree with Simon’s comments above and those of “Ron”.
    I have sat some of the J0 papers and have some of my diploma and for those who accuse the R0s of being dumbing down, if they are so easy and bearing in mind they can be done on computer at an exam centre (so no phoning a friend), perhaps it should be a requirement that EVERYONE does the ROs annually to prove continued knowledge and CPD at teh appropriate minimum standard? Of course that would be crazy as we’d never get any fee paying workdone for our clients, but I’m sure the idea would appeal to a left brainer (but then I am a right brainer I think)
    Oh and Mark Hoban’s comment was in my opinion designed to be insulting, but I didn’t take it as one as I actually know several McDonalds managers and they are often very good right brainers and I would take it as a complement to be included with them rather than some “professionals”. The attempted insult is NOT unique as a similar insult was attempted in New Zealand against their adviser qualification levels.

  9. Anonymous | 3 Nov 2010 5:13 pm

    It is very easy to build security in these days, simple banks of questions answered in short periods of times are one answer, but if you want to be really paranoid webcams are easy, we use them to talk to family all of the time. If anyone cheats then they and the person helping them are suspended from operating in the industry.

    You also forget that these are not academic qualifications, there is no attempt to maintain a failure rate, it is not part of CPD or other vocational type material.

  10. What a long and boring debate this has become.

    The FSA knows it is on a sticky wicket.

  11. i like to eat out

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