Should financial advisers be degree qualified?

Michael Klimes asks if degree level education is the best way to create competent advisers

multi-generational financial education programThe RDR set in motion a key trend in financial planning, with qualifications now seen as a necessary part of proving advisers are up to the job.

Many say upping the exam burden as part of the shift to professionalism has been partly responsible for a fall in the number of advisers in the UK.

RDR raised the bar for professional advisers not just through the abolition of commission and greater transparency, but also a move to QCF Level 4 as the educational standard.

Some advisers say this focus on qualifications has pushed experienced advisers to leave the market, as well as put off potential new ones entering.

Australia is now taking professionalisation a step further with the obligation for all new chartered financial planners to get a degree-equivalent qualification, while existing advisers will need to get the equivalent of a graduate diploma.

This change stems from the work of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that has unearthed major scandals involving advisers.

However, former Australian assistant treasurer Nick Sherry tells Money Marketing he is sceptical degrees or reams of qualifications necessarily improve the quality of advice, since better educated advisers are not automatically more ethical towards clients. 

So should the UK emulate Australia, and what would the effects be if it did? The different answers advisers gave to Money Marketing reveal underlying beliefs about what makes a good adviser in the first place and how this is translated across the profession more broadly.

Embracing professionalism

Plutus Wealth Management chartered financial planner Ruban Sanmuganathan says if the profession could start from scratch, all advisers should have a university degree so they were educated to the same standard.

But he acknowledges advisers do not live in an ideal world and one of the problems that has existed since RDR is the generational gap between advisers who have qualifications and those who have experience.  

He says this gap is evident when looking across younger advisers, who have probably adapted better to the professionalism, and older advisers, who have found it harder to keep up.

To close the gap Sanmuganathan proposes a softer version of the Australian model through the introduction of a mandatory exam to be taken on a regular basis.  

That exam would be taken every three to five years by advisers who would have a grace period if they did not pass.

Sanmuganathan says the purpose of the exam would be to ensure the same level of technical knowledge across advisers and encourage a more holistic understanding of financial planning.

He argues current exams are too modular and the most successful financial plans are those which recognise the interdependence of a client’s assets.

Sanmuganathan adds a mandatory exam would not only break down these exam barriers but also improve the quality of advice and cut the amount of levy paid to the Financial Services Compensation Scheme.   

He also says it would bolster continuing professional development, which he argues is vague and open to manipulation.

While there might be push back against a mandatory exam, and it would be expensive for the regulator to implement, Sanmuganathan believes the benefits would be worth it in the long run.

Others such as Nexus Independent Financial Advisers managing director Kerry Nelson disagree, saying extra exams would simply push more advisers out of the market.

She says the majority of advisers have largely embraced professionalism and are increasing their level of knowledge and qualifications all the time.    

Nelson argues there is a degree of confusion among advisers and consumers about which examination bodies issue the most reliable qualifications, so introducing a universally recognised body responsible for all qualifications would be preferable to forcing a new exam level on the market.

The introduction of another mandatory exam alongside all of the ones advisers already take would only discourage the veterans companies should be striving to retain to stay in the industry, she says.

Nelson believes it should not be for the regulators or industry bodies, but companies themselves, that ensure advisers have the right mixture of experience and technical nous, as well as encouraging ongoing learning and mentoring to keep older advisers interested and give a helping hand to younger advisers.

Continuous professional development has evolved and is a far more rigorous process than a decade ago, she adds.

Adviser view 

Mowatt Financial Planning director Will Mowatt

We as a profession have to think about the big picture and for me this is recruitment as demographics show we need to get young blood into advice firms

Trying to recruit can be done in one of two ways: either through an apprenticeship or degree.

The apprenticeship is appealing as someone starts as a financial administrator, becomes a paraplanner and finally a financial adviser.

At the end of the day financial advice is a practical skill and the way an individual learns will vary but the main thing is a consistent level of qualification.

Specialists vs generalists

Striking a balance between qualifications and experience is clearly one of the tightropes that has to be walked by advisers, industry bodies and the FCA alike.

But the relationship between specialist and general knowledge at both the individual and broader professional level needs to be considered as well.  

Personal Finance Society chief executive Keith Richards says financial advice sought by the majority of consumers is not complex and most advisers try to give a service that is straightforward.

He adds enhanced technical knowledge is already expected for more complex financial planning areas and clients can be referred to specialists when needed.

This division of labour between generalists and specialists works for many firms and widens the range of advice available to the general public.

Richards says mandating a further increase of qualification requirements would have an impact on both the cost and availability of advice.

He argues it would widen the advice gap the Financial Advice Market Review was introduced by government to address.

He also says people from all educational backgrounds have become outstanding financial advisers without obtaining a degree once they have gone through the right qualifications and training.

Aside from the current defined benefit transfer challenges there is clear evidence the advice sector is already driving its own qualification standards and that could reduce the need for further regulatory intervention.

Richards points out there are over 6,500 PFS members at chartered financial planning level and the same number hold advanced qualifications above the minimum diploma standard.  

Wingate Financial Planning director of Alistair Cunningham is fan of specialists with in-depth knowledge about what they advise and says it is important they are not pushed out of the market.

Furthermore, a degree and qualifications do not necessarily develop soft skills, while years of experience and face-to-face interactions with clients does.

Society of Later Life Advisers joint chairwoman Jane Finnerty says she sees many advisers educated to degree level or above, but they might be uncertain about their soft skills so her organisation can help them develop in specific areas to meet the needs of older clients better.

Lessons from Australia


Given the continuing debate in the UK, it is useful to head back to Australia again where consultant Calvert Duffy says the question of how advisers are educated and gain knowledge cannot be separated from how the general public views them.   

This is because advisers are most effective and valuable when the population at large is financially literate and engaged with the subject matter.

Duffy says the cost of educating the public a little better on financial matters costs far less than clearing up any later problems through messy court hearings or heavy-handed legislation down the line.

This view appears to be borne out by the experience of steelworkers in Port Talbot in the context of the British Steel Pension Scheme or scam victims of unregulated investments.

A better educated public combined with a greater presence of more credentialed advisers could be a solution to these scandals that can tarnish the profession.  

But it is worth remembering former Australian assistant treasurer Sherry’s warning that educating financial advisers better does not automatically translate into more ethical behaviour.

That observation about ethics has to be kept in mind as the sector will likely continue to become more professional as the years go by.

Expert view

Degree education is not everything

To my knowledge this subject has been talked about on and off since 1999, and we have come a long way since then.

The emphasis should be placed not only on knowledge but also on the skills to apply it to ensure the best quality of advice is given to the public.

We should remember that everyone has different advice needs and care should be taken to ensure that those who are in most need of advice are not disadvantaged. 

We should look at what is happening in other countries such as Australia and learn the lessons from there first.

Degree level education would increase the quality of advice for those who need help with complex situations.

But it would also increase the cost of advice for everyone and have little impact on clients with simpler needs.

I do not think a university-achieved degree should be compulsory as it could increase costs for planning and wealth management firms.

We need to identify exactly what knowledge and skills gaps there are for more complex advice and then develop core university modules to help plug them.  

Jacqueline Lockie is CISI head of financial planning



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There are 34 comments at the moment, we would love to hear your opinion too.

  1. Learning to pass exams of any sort has never made the participant excellent in a particular field.

  2. As someone who has recently spent a lot of time studying and learning the differences between the UK and Australia, I feel I am probably more qualified than most to comment.

    Australia’s problems stem not from a lack of knowledge, but from the fact that many Aussie advisers are product salesmen, many of whom appear to have similar issues to many UK adviser did 10-15 years ago.

    Australia may be ahead of the UK in some areas, particularly qualifications and disclosure, but in some areas, such as real financial planning it’s anything up to a decade, possibly more behind us.

    Fundamentally it’s not the qualifications or education that’s the problems either in Australia or the UK, it’s that many advisers simply do not seem to grasp the simple concept that and advisers job is to tell the client what they need to hear, which may well not be what that client wants to hear.

    Many also fall a long way short of being able to actually “plan” anything for a client, simply because people that are good at getting people to “sign up” are usually not very good at technical things and certainly not good at working things out.

    There are solutions to the problems, but none of them involve studying for more exams that teach them nothing about what they are doing wrong.

  3. It’s not just about exams – communication is a major part of an adviser’s requirement.

    However many exams you have if you can’t communicate it efficiently to a client you are not a ‘good adviser’.

    A Chartered and Certified FP.

  4. Richard Clinton Green 9th January 2019 at 1:37 pm

    As was stated, having a degree does not mean that you can deal with peoples problems/issues better and experience in helping people makes it more likely that you would be able to understand what people need and therefore work out an appropriate solution as opposed to theory.

  5. “Many say upping the exam burden as part of the shift to professionalism has been partly responsible for a fall in the number of advisers in the UK.”

    I don’t know of anybody who thinks otherwise.

    Scandals normally stem from dishonesty, not lack of knowledge. So the end result will be more highly educated dishonest people whilst at the same time, like the RDR experiment, throwing out thousands of competent advisers.

    Unless grandfathering is allowed, this time.

  6. Charles Burchhardt 9th January 2019 at 4:20 pm

    Most professions (lawyers, accountants, surveyors etc), generally have an inhouse training scheme from internship up to the relevant chartered status. Our profession needs to move away from the, here’s a book, go read and then take an exam, attitude and implement professional inhouse training schemes.

    At 57, I would love to achieve Chartered status, but would like a structured training programme integrated into my normal daily work activities.

  7. “….if the profession could start from scratch, all advisers should have a university degree so they were educated to the same standard.”
    An interesting perspective, but one that will inevitably promote greater elitism at a time when more than 10 million people are missing out on advice.
    It`s also hard to reconcile with the growing practice of the big four accountants to train recruits to their required standard straight from school.

  8. Matthew Stevens 9th January 2019 at 4:28 pm

    I’m in favour of knowledge but if you raise the bar too high you will see the select few advising the rich while the mainstream advisers reduce in numbers over time. If the advisory industry cannot provide advice to the masses it will be seen as not fit for purpose by the FCA and eventually replaced with a lesser scripted service from banks or basic online robots. The way to reduce poor advice/fraud is to have a more effective regulator that requires details of the recommendations made and can then target advisers making high risk recommendations. A high risk investment permission category could filter out the advisers putting client money in storage pods or Brazilian rain forests! It’s not rocket science.

  9. It’s the combination of knowledge, qualifications, skill and experience that generally makes for an excellent participant in a particular field. Exams (the study as much as the passing) are an important part of the mix

  10. Lets see.

    Run up a debt of, say, £50,000 on the promise of a higher return later on which may, but very well may not, leave you better off.

    I say yes – provided the Student Loan Company is placed under FOS jurisdiction.

  11. I agree with the posters here, this is just elitist drivel.
    Should it be about breadth or depth of knowledge?
    Qualificaitons and CD are supposed to be RELEVANT and a degree for a degrees sake is just elitism.
    I have my FPC and my Diploma, with ER1, J10, J12, RB1, J07, AF6, GR1, CF9, CF8. So some stuck up KNOB thinks their degree in FS and chartered status means my right to earn a living and the fcat I have NEVER had acase go to the FOS means they can try and remove me as my clients adviser when most of them wouldn’t want to deal with a stuck up prig……
    Most of teh damage to clients is done my adviserw tih LEVEL 6/degre level qualifications. The F-pack staff often don’t have ANY relevant exams when they start there (I think my RB1 banking exam is one more than many F-pack staff have/had including Hector Sants!)
    Advisers are either honest or dishonest and a degree doesn’t all of a sudden make someone honest, nor does signing an ethics code.
    It does make me angry when drivel come sour of the mounts of some buffoons who think they are better than anyone else.

  12. Their typing is probably better than mine though, but I’ve never had a client complain about my typing error, just people who think that they are better for some reason (perhaps they have some form of insecurity that is assuaged by criticizing something which isn’t important to many clients as what is important to them is that we explain thngs to them VERBALLY, not with a 40 age suitability report, spelt correctly which they can’t understand nor bother to read.)
    I will stick with my Eric Morecombe typing style (all the right notes/keys, just not in the right order) and keep advising my clients thank you.

    • Indeed Phillip, I am a student of the university of life, not purely of financial services.

      Indeed even at work I sometimes get the mick taken because I have qualifications and experience in many widely varied fields across many different intellectual and practical fields.

      Someone’s ethics is vastly more important in FS than their “knowledge”.

      You can teach knowledge, you cannot teach ethics.

      If anyone wants further evidence, just look at Westminster for the last 3 years if you want to understand why a lack of ethics can be catastrophic.

  13. A degree qualification shows you can pass exams but what you need is many other skills to engage with clients and provide a knowledgeable service…competency is key in a ever dynamic role.
    Has the number of advisers – old and new fallen not because of RDR qualifications but instead removal of ongoing sales commissions and incomes is the key question?

  14. I have been given to understand that CFP Chartered is educationally level 6. If so this is equivalent to a degree.

    When it comes to degrees – what degree would be considered suitable? There are now so many ‘Mickey Mouse’ degrees around that have devalued the whole concept. Is football management or macrame knitting considered suitable?

    Please also bear in mind that England has the highest proportion of graduates in school leaver jobs (28%) of any developed country because they lack basic numeracy and literacy. They just don’t have the maths and English. How do they get into University, let alone get a degree (sports management??) Of 700 social science undergraduates over 9 universities only 25% had sufficient numeracy needed for daily life and the workplace. OECD Findings.

  15. Quick question: is the person who’s recently passed the driving test (or even the advanced driving test) the best driver on the road?

    Obviously not. True competence stems from a combination of knowledge; skill; and experience. Each of those elements are symbiotic.

    Passing an exam – even a degree-level one – is simply passing an exam.

    To extend the driving metaphor, I’m helping my daughter learn to drive currently. I’ve passed on my wisdom (such as it is) that her professional driving lessons teach her the essential controls; rules; and how to pass the test but her time spent with me actually driving teaches her true competence.

    • I think your broad idea is not wrong – except when it comes to the Advanced motorist and those who have taken the even further test of Masters (I have done both).

      I can assure you that these drivers are streets ahead of the average.

      • Indeed Harry, however that also doesn’t mean that someone without those “exams” isn’t just as good, if not potentially better.

        Exams/tests do not demonstrate competence, they demonstrate knowledge at a specific point in time.

        I doubt many people would suggest they were a better racing driver than Juan Manuel Fangio, yet Fangio never passed a single driving test in his life..

        • Yes, but we are talking ‘broad brush’ average, not the odd amazing exception. Broadly those with a decent qualification with experience and the right attitude are in general preferable to those will all the above attributes save for the qualification.

  16. Exams are the same world over people learn how to pass them, once passed, then duly forget 90% of the information they had to pass them in the first place !
    Also you would have to say most financial exams are out of date within 6 months to a year with legislation or regulatory changes.

    Why don,t they do course work with a case study through to suitability report with accompanying paperwork , this is a more realistic way of assessing competence,say with a 5 day return ?

    Lets face it who (apart from superman/woman) would do a lot of complex calculations and take a stab at answering a client question based on 4 possible scenarios, in a 2/3 hour appointment or the time it takes to do an exam (who would do a 3 hour appointment ? ) I would say 99% of what I take away from a client meeting is calculated and researched in the office.

    Personally a average case may take me upto 15-20 hours taking into account 1st visit, 2nd visit, fact find, research, analysis, compliance checks, suitability report, printing and proof reading, then possibly 3rd and 4th visit and in all this time you are learning, collecting information, making calculations, cross checking, and validating !

    We are stuck in a high school mentality, of linear learning as the whole basis of validation, which is crazy considering, its a very small part of what we actually do !

    Also we all learn in different ways linear, practical, sound, sight, or a combination of all.

    For those who would say …course work “you can look up the answers” its cheating….absolutely; we do this every day, if we know the answer from a client we tell them….if we don,t we go back to the office and research ! its not cheating its doing your job correctly by not giving the client incorrect information…. by this measure all exams we do should have a 100% pass rate as one incorrect answer to a client could be disastrous for them yet most exams have a 75-80% pass mark that means I could pass an exam giving 20% or over, crap information !

  17. only increase the advice gap

  18. I am not sure I agree with Ruban. S in regard to all advisers being degree qualified.

    I personally left university due to the cost and wasted hours, a 3 year course that could be completed within a year.

    I have just finished a 13 month course to reach diploma level, at a fraction of an undergraduate degree cost, and in a much quicker time scale. Potential advisers simply won’t go to university to become qualified unless:
    A) universities were to offer a 1/2 year course & B) at a fraction of the current cost.

    There are various options for students to become qualified in a structured, professional and safe environment already, but unfortunately I don’t believe we as an industry do enough to promote these fantastic schemes.

  19. This is a continuation of the qualification arms race. This has happened in the general job market where degrees (of sometimes dubious value) are ubiquitous meaning that firms in many areas now expect this to be a minimum criteria despite in many cases this providing no information on the suitability of the employee for the role or indeed their honesty.

    The truth is a degree provides some information about the ability to take on and assimilate information (and in some very technical roles, such as science, needs to be a requirement). However, in our industry it provides very little insight into whether the individual is able to pass the information that is in their head on to those, whose understanding and interest may be much lower than their own, in such a way as for this to be understandable.

    All clients want their adviser to be well informed and up to date with regulation which is as it should be. However, they also want them to be able to explain complex information in a manner that is accessible to them. Holding a degree in for example Physics has no correlation to this second more important ability.

    I once worked with a technical manager who was pretty much a genius and knew everything there was to know and occasionally met clients with us. However, it needed us as advisers to act as translators to put his technical language into English so clients could understand what was happening.

    BTW I don’t have a degree but have passed every exam I have taken from FPC 1,2,3 through to AF3 on the first time I took it.

  20. Diane Abbott has a degree but I’m not sure that I would want her as my financial adviser 😉

  21. The accountancy, legal and other professions all admit members based on professional education and training, rather than barring non-graduate entry. Indeed, a couple of the top four accountancy firms have embarked on recruitment programmes for non-graduates wishing to train for entry to the accountancy profession. I am a graduate in a relevant field (law), which has held me in good stead over 30 years as a wealth manager. Conversely, I have worked with many non-graduates who are similarly capable. I support a high level of professional education and training for new entrants to our profession. It is condescending of ‘younger’ advisers to suggest that ‘older advisers’ have difficulty in working to high professional standards. There are plenty of sloppy younger ones who cannot even ‘cut and paste’ their organisations’ verbose standardised reports properly, nor spell, nor apply grammar correctly. How well educated are they?

  22. A number of graduates, even in financial and business related subjects, struggle to be competent advisers or paraplanners. By limiting opportunities to graduates you are also enforcing classism to an extent as not everyone can afford to go to university or can take on such a large debt to do so if family aren’t subsidising tuition and/or living costs. Some graduates are so arrogant or introverted they lack the basic social skills to work in an office or with other people, let alone discuss sensitive matters with a client. It would be better to use Chartered as a minimumm as this does require greater literacy and maths ability than the dumbed down multiple-choice diploma although this does not address the problems with ethics and ethics and firm culture is often the root cause of advice complaints not technical competency.

  23. No it shouldn’t be compulsory, and I say that as someone who has a degree. If financial services is to be recognised as a ‘profession’ rather than an ‘industry’ it does need to be the case that a certain degree of academic ability is required, as is the case if you are seeking to become a lawyer, accountant or actuary. However, as has already been said, even the largest accountants are taking trainees straight from A-levels now. As I understand it, Chartered adviser status requires a Level 6 qualification, which is equivalent to an undergraduate degree, so the facility already exists within our industry/profession to see who has a degree-equivalent qualification.

  24. Quite frankly you’re all missing the point. I think the FCA should insist on a degree qualification for all advisers, with no leeway at all. Furthermore, I believe the degree in question should be either 14th Century Renaissance Art or possibly Russian with Higher Maths for Mortgage and Protection specialists.

    Either of these will demonstrate the total suitability of a candidate (obviously with gap fil for Mortgage advisers), whereas I really cannot see any other route to showing competence. This would allow the instant dismantling of all that silly ‘CPD’ and ‘learning and experience’ that we currently have to rely on, and instead ensure a strong supply of highly qualified, ethically beyond reproach advisers fit for the 21st Century and beyond.

    I myself having done it the ‘old fashioned’ way of passing industry specific exams, and getting Charter and Fellowship now realise my qualifications are insufficient, and will be studying the Old Masters forthwith.

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