Q › Business plan:
We are in the process of updating our business plans and we intend to recruit a number of advisers over the next 18 months. What criteria should be we be using?
A › Roderic
The starting point is to be clear about your proposition and in turn the areas of the market your firm will be focusing on. The next question to address is whether you intend to operate as independent as opposed to restricted advisers. You then need to have a methodology to evaluate candidates’ aptitude and attitude in relation to their commitment to studying and passing the required exams to achieve the required number of credits to achieve QCF level four status. The maxim: “if in doubt don’t” should be uppermost in your mind. Recruitment is costly, as are mistakes. Finally, for those who have yet to embark on their studies, they might want to await the guidance from the Financial Services Skills Council which is due shortly so that they are clear as to what they need to study.
Q › Investment
Distributor influenced funds seem to have generated a lot of mixed comments and press coverage. What are the main issues for my firm to consider as we review our investment proposition?
A › Roderic
Difs have indeed generated a lot of comment and column inches and they have also caught the eye of the FSA. Comparisons have been made with broker bonds and it is very important you get a very good understanding of what they involve and, most importantly, their impact on your clients before you take any decisions. The first question to ask yourself is why you think Difs might better meet your clients’ needs compared with your existing proposition and other alternatives. In particular, can you satisfy yourself, your clients and the FSA that they are likely to offer better value for money? Next, are you confident you have the necessary systems and controls in place to select, implement, oversee and if necessary dispense with managers? Also, are you confident that you have systems in place to identify clients for whom they are suitable and those for whom they are not? In short, do you have a robust advice process in place? Unless you are going to be able to achieve genuine economies of scale, this route may be one that is best left as the regulatory consequences let alone potential for adverse client reactions are considerable. Finally, obtaining impartial expert (external) client advice is vital so that you maintain a robust and verifiable audit trail.
Q › Assessment
I have read a lot about alternative assessment but what do I need to be aware of before making a decision to embark on this route against sitting written examinations?
A › Roderic
There is good new and bad news. The good news is that the FSA has listened to pleas for more flexibility and provided more on this in terms of what methods can be considered. These are set out in the regulator’s most recent paper on RDR, 09/31, published in December. The bad news is that not only is there still not enough detail in terms of who can provide these assessments and the costs but also they will still have to meet QCF level four standards. In practice, obtaining the requisite qualification on this basis may still be very challenging and in the end, written exams may be a less stressful route to take.
To ask a question, contact Rob Reid & Roderic Rennison firstname.lastname@example.org