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Straining training

Becoming an IFA is far from easy. It means entering one of the most tightly regulated industries in the country. Even doctors and lawyers might blanche at the requirements set down by the regulator.

The sector cries out for new blood like a thirsty vampire but rarely gets any. Very few firms, other than the biggest are willing to train graduates from scratch. So by and large, there is no real compliance training of new recruits, only training and evaluation of existing industry professionals.

Traditionally, IFAs have replenished stocks from the dwindling direct salesforces. Movement between IFA firms has historically been limited, and most IFA firms are small and reliant on close relations build up over years. But recent consolidation in the industry could see many more on the move.

John Derry-Collins, chairman of IFAct, a consultancy specialising in compliance support to IFAs, says IFAs are required to go through a the highly prescriptive procedure.

For regulation purposes, recruits are classified as new entrants or experienced new entrants. Very few qualify as the first as few companies are willing to take staff through the FPC exams. Most firms are dealing with the latter, and the fact that they may already have considerable experience in the industry, perhaps even as an IFA, does not mean they can simply resume work in the new environment.

First, all firms employing new staff are required to investigate their history thoroughly. The rules say the firm must obtain a history for 10 years and references for five years and there must be no more than a two-week gap. The new employer will need to find out if any complaints were made about the employee and also need to see exam certificates.

The new employee has to fill in a long questionnaire – the fit and proper check.A credit reference will be carried out.

There follows two more stages that have to be carried out. The first is firm-specific, during which the new member of staff cannot see clients and during which he or she has to be familiarised with the firm&#39s procedures and the kind of business that they write. This should be tested by means of a written exam.

Under stage two, the adviser is allowed to go out and meet clients but under supervision. The supervisor has to observe the debutant going through their paces and the full selling cycle. During this time, the supervisor is responsible for any advice given.

Derry-Collins says this procedure can take anything from six weeks to six months, and involves considerable cost. Once this is done, the regulator has to be informed by means of an IR1 form. He warns that the regulator can ask for evidence that the required procedures have been carried out.

As consultants, Derry-Collins says they are usually called in after stage one and can offer training and assessment as required but they do not take responsibility for any financial advice given.

Derry-Collins points out that if you have not already practised as an IFA it is virtually impossible to practise outside of a network.

It is clear why once established, advisers do not tend to move around in the same way that other professionals do.

But the training and compliance burden is something that IFAs can turn to their advantage. Inter-Alliance director of compliance Charles Meade King says: “If you want to deal with professionals you need to be able to prove your own professionalism.”

Apart from satisfying regulatory requirements, many firms also look to provide other forms of training for new recruits, such as selling.

Norwich Union director of IFA development David Barral explains what is on offer to IFAs. For people moving from direct salesforces, they offer basic product and technical training. For existing IFAs, they offer training sessions for AFPC exams. They supply IFAs with a CD-Rom dedicated to training and development issues and will soon have a specialised website on the subject. Training in “soft” skills such as marketing and presentation is also arranged.

Barral says the providers recognise that to extend their market share they need IFAs and will work closely with IFAs to provide assistance. Norwich Union, for example, has five full-time training and development consultants to help IFAs.

john stones


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