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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.”


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Just because i have reached level 4 status it doesn’t mean I can earn a decent living after 2012 so I will not be advising on investments after this date. The exam was taken more to prove that I was capable rather than as a requirement of the FSA. We will only know the true number of advisers left once RDR has started.

  2. 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.”

    Is this a joke? Like the FSA gives a damn about how many IFAs leave the industry. The effects of the RDR in respect of the compulsory attainment
    of qualifications have been brought to the FSA’s attention on numerous occasions by a wide variety of agencies without any meaningful response.

  3. Christopher Lean 6th December 2011 at 8:02 pm

    @ Anon 5.37. I think that a lot of advisers will have the same view and stop advising on investments.

    I am still of the opinion that firms with large salesforces are not so interested in having qualified advisers as they tend to ” ask” questions.

    I heard a phrase from the CII” sheep dipping”. This is where all the salesforce, no matter what level of ability or qualifications, is sent on the same compulsory training course.

    I worked for a firm like that. It was like mixing GCSE, A level, under grads and post grads all on the same course. A complete waste of time.

  4. I can really understand why the first anon says level 4 and not remaining in investments.
    I have 80 points at diploma thru the CII and depending upon whether I argue the case, 3 more or 2 less than is needed for my Diploma and more exams planned this year that I actually WANT to do and having bugger all to do with the level 4 compulsory crap.
    Yet I seriously considered leaving teh industry despite having 20 years of working value in front of me.
    I have decided to stay (no thanks to the F-pack), more out of a determination to NOT let the buggers get me down than anything.
    I am a 1 adviser firm and I recognise we need to merge to achieve the economies of scale this offers or take on new advisers, hence why we interviewed for apprentices today and am pleased with the two we are offering a place to.

  5. I could have told them this for free.

    There are more fundamental issues the regulators have missed because they are looking in the wrong direction, wherever that may be.

  6. Stick and carrot. The FSA has yet to learn the fundamental principle that people will gladly rise to a challenge if they are motivated to do so.

    Beating IFA’s around the head and telling them to ‘be afraid, be very afraid’ is just plain wrong.

    And the FSA has still not addressed the fundamental problem with RDR which is that people do not like paying fees. Why is the public not being given a choice?

    RDR is simply government interference in business. Plain and simple.

    Look lively, lads. The Cap’n wants to go water skiing. You did bring your oars to the meeting, didn’t you?

  7. I am level 4 qualified and will be giving up my Investment authorisations after 24yrs (without a complaint) as I don’t feel I have a critical mass of HNWC and the IFA element is 35% of my business. I will instead introduce this element (for my clients willing to pay a fee) for a split, save myself the FSA/MAS/FOS/ etc etc fees/levies and focus on GI, protection and mortgage business.
    I have also steered my daughter having graduated towards another career as I now feel with all this bad regulation, claims companies etc etc this is no longer a “happy” or growth industry

  8. There won’t be a need for anywhere near as many advisers in years to come anyway – all pensions will be driven via NEST (the cap on contributions and transfer ban will disappear as they struggle to cope with all the opt outs and recouping their costs), no one will buy life cover as they won’t pay a fee for the advice to get a £20 pm plan and those of us left wil be wealth advisers, to the few clients with enough money to advise.

    When MM did an RDR Roadshow, they estimated that there are a potential 55 clients for each adviser out there, with sufficient funds to cover costs of advice.

    The truly worrying aspect in all of this is that the original aim of the RDR was to make financial advice more accessible – the actual outcome will be the polar opposite, making it less accessible – meantime the FSA will claim it was all a success as everyone is more qualified and presumably once they change their name to the FCA they will try to claim that anything the FSA did that was bad isn’t their fault (even though it’ll be the same people at the same desks)

    Only in the unaccountable land of the public servant and quango could an outcome that misses its original target so badly be lauded as a success

  9. freindly society’s F I N I T O
    Most firms will charge a minimum £300 fee or 3% plus of the investment value
    The game has gone…Hang up yer boots peeps

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