Reaching RDR benchmark could cost me £200k - IFA

An IFA says reaching the minimum qualification proposed in the Retail Distribution Review (RDR) could cost his business up to £200,000.

Steve Brady, a partner at Brady & Jones, calculates the 13 exams he and his two colleagues need to take between them to achieve QCA Level 4 will require 1,300 hours of study time, costing his business around £150 an hour.

Brady spoke out after the ifs School of Finance today unveiled its Diploma for Financial Advisers, which becomes the third QCA Level 4 qualification available.

The RDR is expected to announce the benchmark level for all UK financial advisers early next year, with QCA Level 4 the most likely candidate.

Brady and his colleagues have followed the Chartered Insurance Institute’s (CII’s) credit-based Diploma in Financial Planning (DFP) route.

He says Brady & Jones has collected, between its advisers, 189 credits, 44 short of the required 233 to attain QCA Level 4. Brady estimates 13 exams between them will bridge the credit gap, but calculates that will require around 1,300 hours of studying. Around 1,300 hours of studying, Brady reasons, will cost his firm around £150 worth of business per hour, a total of £195,000.

He says: “What kind of business in today’s market place can absorb that kind of cost?

“I don’t think anybody has given due consideration to what it means. Who is going to pay for that? I was absolutely stunned when I saw that figure.”

Brady says his firm provides a good service to its customers, who are advised on all aspects of financial planning including pensions, investments and mortgages.

“I don’t think any customer that comes to me is going to be disadvantaged if I don’t have these final credits,” he says. “I have got a lot of experience.” Brady likens the scenario to that of a patient requiring life-saving surgery. Would the patient rather a surgeon with 30 years experience but without the qualifications that would be recognised today, he says, or a surgeon just out of school with the recognised qualifications?

“I’m not demeaning qualifications,” he adds. “It’s just that no other industry waits until you’re qualified and then changes the rules.

“How do you plan ahead as a business when things are being imposed on you all the time? I already work 50 to 60 hours a week. Where will I find the time?”

Contact:
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Have your say:

"I agree 100% with what is said. Like Steve Brady I work 50 to 60 hours a week and I have been in the business over 25 years. Where will I find the time to complete these exams. I can understand introducing qualifications for new entrants into the industry, but not for advisers that have been in the industry for some time." Bob Riach, Riach Independent Financial Advisers

"May I add to Steve Brady's comments about the cost of taking yet more exams by saying that I have been an IFA (and independent before the IFA title came in) since 1985. If I am required to take any further exams I shall stop being an IFA. Am I entitled to call this 'trade restriction' or against my human rights to continue earning a living? At 64 with no complaints against my advice and with another 5 or so years to go I am not taking any further exams! Exams do not make an IFA a better adviser! The clever adviser is not the one who knows, but the one who knows where to find out!

P.S. When do the employees of FSA who come out with all these dictats re-take their degrees or whatever? And this can apply to all professions." Derek Vivian

"That’s made my week. We’re using modal verbs now...and at the lowest level of possibility in the form of ‘could’. So presumably the RDR benchmark could be a 99 with a jolly big flake in, the FTSE-100 could reach 82000 by next week and the X-Factor could attract individuals who are not deluded egomaniacs? An IFA ‘estimates’ 1300 hours for 13 papers, so that’s 100 hours per paper. Yet, by their own admission, they have “got a lot of experience” and even go so far as to compare themselves to a surgeon with 30 years’ experience but no qualifications.

If you’re that experienced and know so much, it ain’t gonna take you that long to study. So stop whining and if you’re working that many hours, maybe focus on working smarter. The sooner we rid ourselves of those who believe that they are in some way exempt from qualifications purely because of how long they’ve been around, the better." Anonymous

"As someone who has previously taken both CII and School of Finance exams it may be helpful to highlight that without exception the ifs exams are cheaper. Personally I would say they are much better too but that's not the bone of contention here. If cost is this firms only criteria then I would have thought switching over to the new ifs Diploma for Financial Advisers would solve his problem so its not clear why there is such a fuss. That said, £200k seems to be a rather extraordinary figure and Im not sure this is at all likely." Ali Hussein

"The article suggests this claim follows the ifs announcement of a new qualification but in fact the story relates solely to the long winded, outdated CII system that requires millions of credits and repeated exams. My understanding is that the new ifs qualification will be much more rooted in the realities of financial advice and will be "achievable within a year for practicing advisers". Anyone who can't make that type of minimal commitment should not be in the industry, irrespective of age!" Ted Cordener