The 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.
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.
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.
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.
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