Racing to the RDR finishing line

Maria Merricks looks at how the RDR’s qualification requirements will impact the adviser community.

With only 30 months to go, many advisers are facing a race against time to be RDR-ready by the December 2012 deadline.

Promising to provide a “golden opportunity” to re-build consumer trust, the regulatory shake-up demands advisers are qualified to a higher minimum level: QCF Level 4, or the equivalent of the first year of a university degree.

The move, the FSA says, aims to increase the professional standards of advisers and ensure IFAs are regarded as being on a par with other professionals, such as lawyers and accountants.

Although it is rare to hear stakeholders oppose an improvement in professional standards, few advisers say they welcome a return to the exam room.

The issue for many is: does a piece of paper guarantee a better standard of advice? Mark Loydall, director of Cambourne Financial Planning, does not think so.

“It just means that more paper is needed before a client can be given poor advice. Too many aspects of the current crop of qualifications are about learning facts rather than about application to client situations,” he says.

Mark Waters, investment manger at Skerritt Consultants, agrees: “Qualifications don’t mean that you’re a better adviser. You could have more letters after your name than a postman has in his sack, but if you lack in personality it’s likely that clients will go elsewhere.”

Waters’ concerns are echoed throughout the industry.

Martin Bamford, managing director of IFA Informed Choice, says the combination of higher qualifications, relevant experience and an agreed ethical code will result in the best outcomes for consumers.

Professionalism

Despite industry opposition, the FSA is insistent the new qualification benchmark will be implemented.

Indeed, any hope the regulator may change its mind quickly evaporated last week following the publication of its latest consultation paper on professionalism.

In it, the FSA presents evidence from recent research, linking higher qualifications with better consumer outcomes and concluding that “advisers who hold higher minimum levels of relevant qualifications… will be more competent and less likely to make mistakes that could result in unsuitable products being recommended to their clients”.

Although this cannot be guaranteed, Bamford says he understands the regulator’s point: “Overall, a sector full of professionally qualified advisers should raise standards and outcomes.
“It will certainly improve the perception of advisers in the minds of consumers, and that is half the battle.”

 With this in mind, perhaps it is time for the adviser sceptics to adopt a more positive attitude and embrace the RDR as an opportunity to improve their professional knowledge and qualifications for the benefit of their clients and firms.

Being RDR-ready

There are a number of ways advisers can make sure they are RDR-ready come the end of 2012 and, for many, obtaining the required qualifications may turn out to be less daunting than they originally feared.

Firstly, many advisers will already satisfy the requirements, holding a ‘legacy qualification’ of, for example, a financial services degree or the Chartered Insurance Institute (CII) or ifs School of Finance diplomas. In this instance, advisers will be required to bridge the gap to the new qualification standards with CPD top-ups.

Meanwhile, the FSA is finalising details of an alternative assessment for experienced advisers who would prefer a non-examination route. Details are expected to be released in November this year and are set to include an intensive assessment day. Although an appealing option, this route comes with a price tag of over £2000.

Advisers who do not hold the relevant qualifications are anticipating a hard slog towards the deadline, whilst at the same time juggling their existing workload.

However, since the RDR bombshell, numerous initiatives have been established to help the transition go as smoothly as possible, from online materials and support from companies such as Aegon and Zurich, to revision sessions hosted by JP Morgan Asset Management.

Online modules

BNY Mellon Asset Management – through the ‘Revision Mate’ website (www.revision.mate.com) –  has launched a series of online modules, covering each of the eight CII diploma units, which include business planning, pension income and financial planning practice.

Scott Goodsir, from BNY Mellon, says the format of the individual units reflects the needs of today’s market for current, targeted and technical learning.

An important aspect of a successful revision programme is the ability to ensure that the balance of adequate study alongside full time work is managed as easily as possible, according to Goodsir.

He says: “We recognise the challenges the new qualifications present advisers while they endeavour to provide the best possible service to their clients, so we will provide sustained and comprehensive support to advisers to assist them as they embark on their exams.”

Mark Walley, director of corporate education at the ifs, says their diploma’s success is down to a learning experience that reflects the day-to-day life of an adviser.

Confirmed as an approved qualification in the FSA’s most recent consultation paper, Walley says in the last few months the professional body has seen a surge of interest in its qualification, with registrations for the most recent study session up 900%.

Indeed, there are many firms and advisers that have managed to bypass this particular RDR headache by anticipating the changes ahead of time; it is these commentators that believe a move to minimum qualifications at level 4 is unlikely to be the end of this journey.

What are the most important lessons? “We need to continue to look further down the road at what is coming next,” claims Bamford. “The forward thinking adviser will continue to study and pass exams all the way up to Chartered status.”