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Senior service could be sunk by the RDR

Lee Jones reports on the predicament for experienced IFAs who face having to study for and pass tough new exams with no account being taken of their record in the business

By the end of 2012, the retail distribution review requires all IFAs to have qualifications up to QCL level four to be able to give independent financial advice. But for some advisers, especially those approaching retirement age, the prospect of having to sit down and take a range of new exams is a step too far.

Many IFAs who have been giving advice for decades question why they need to further prove they can do their job. The FSA is currently not planning to allow advisers to grandfather on the basis of experience and has not offered any work-based assessment alternatives to the eight-hour written exam.

SimplyBiz chairman Ken Davy says: “It is nonsensical to say that someone is properly qualified to give advice one week and then told the next week that they are not so.”

Many fear the added exam burden will mean the industry faces an exodus of experienced IFAs who are unwilling to work on new qualifications. Conservative Parliamentary candidate for Wyre Forest Mark Garnier, together with Worcestershire-based Conservative prospective Parliamentary candidates Harriett Baldwin and Robin Walker, met with local IFAs this month to discuss the impact of the RDR.

‘I fear that those who have been in the business for 30 years will just wind it all up and we will lose a wealth of experience for no reason’

Garnier says one of the main issues for advisers is the prospect of having to take more exams towards the end of their career. Garnier hopes to take these concerns to the Tory front bench to help avoid losing experienced IFA talent. Garnier says: “It is ridiculous there is no mechanism whereby if you have maybe 10 years of experience with no track record of wrongdoing, why you cannot simply be grandfathered into the new exams. I fear that those who have been in the business for 30 years will just wind it all up and we will lose a wealth of experience for no reason. It will affect consumers as much as it will affect IFAs as some have an incredibly long relationship with their adviser.”

Earlier this year, Aviva predicted that the new requirements for QCA level four qualifications could see as many 10,000 IFAs leave the business. Even if is at the high end of the range of estimates, any IFAs leaving the business is potentially leaving customers without access to advice.

Davy says: “The danger of advisers leaving the sector is very real and will be a tragedy for their clients and the public at large. We want more advisers, not fewer.”

On the right, three IFAs talk about the impact that the new requirements will have on them and their concerns for what it will mean for their clients.

‘Experience over the years has allowed me to avoid problems that many younger IFAs have got involved in’

Roger Harwood, IFA, Kingsgate Financial Services

“I have passed many professional exams during my life, not least a banking one and also sufficient exams to be an IFA and at age 65 I do not feel inclined to take any more exams.

I have just passed my TCF tests with flying colours, and clearly if the FSA had any question marks over my abilities they would have said. I passed a telephone exam and also a visit, so it is not as if I am doing anything terribly wrong here. Experience over the years has allowed me to avoid problems that many younger IFAs have got involved in.

I will only leave the industry in 2012 if I have to, and I hadn’t intended to. I am perfectly fit and active and I expected to go on advising into my 70s. I have the experience, I am fully computer-literate, it even appears the Government to want people to carry on working past 65, so why stop? It is not about just earning money, I want to occupy my mind and take care of clients, some even older than me – my job is enjoyable, it is not a chore.”

‘I really do not think that passing another exam necessarily makes you a good adviser’

Jeremy Newbegin, director, The Ethical Partnership

“When you are nearly 57 years old, balancing all your adviser and directorial demands and then making sure you are doing all that is required of you with regulation is challenging enough but added to that is now a requirement for extra qualifications to keep on doing what we have been doing for 30 years – there are not going to be enough hours in the day.

I recently took J05 and I failed it. It was a lot tougher than I expected. I did a lot of revision, admittedly it was in November 2008, so it wasn’t the best time to be doing it but I really do not think that passing another exam necessarily makes you a good adviser.

As an IFA, I have seen three recessions, a stockmarket crash and innumerable other ups and downs. It is only by experiencing and overcoming challenging events that you can become a better adviser.

By 2012, I will be nearly 60. I will have to take the exams but, having failed J05, I was shocked and have lost confidence in my ability to pass any more exams. I don’t like failing anything so next time round I will have to set aside an awful lot of revision time but it is more difficult to work the extra hours when you are older than when you were younger.

If I do not pass the exam in 2012, I will have to call it a day at just under 60 but if the regulator went and interviewed all my clients they would get a totally different picture of what sort of adviser I have been and am to them.”

‘This all just pushes people to where the FSA always wanted them and that is to he banks’

Nick Taylor, director, Independent Mutual

“I have been in the industry for nearly 30 years, some of my colleagues have been around for even longer, and if we choose not to take the exams the FSA is basically putting us out of work. I think it is unfair. When you get to a certain age you cannot contemplate taking any more exams, it is not about the time or the money.

We have nine advisers left at our firm, one has already packed it in and four or five more, including myself, may not take the exams and just leave on the last day of 2012. I think there are an awful lot more people who are in the same situation.

Who knows what we will do with the client base – our clients would like to stay with the same people because they know they can trust them. We have not told many clients we are planning on leaving, as we do not want to worry them but they will not like it as some of them have been with the same adviser for 40 years. The RDR requirements are a big disservice to consumers and it is disingenuous for the FSA to say these extra qualifications are all for the clients’ benefit. This all just pushes people to where the FSA always wanted them and that is to the banks.”


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