Staying a step ahead

Qualifications are becoming increasingly important for advisers as competition increases and regulatory issues become more prominent. Following press reports such as the endowment mis-selling scandal, clients are more aware of the importance of receiving good advice and are more likely to shop around for an IFA that appears to be the best qualified.

The protection market is no exception and with more products around than ever before, advisers would do well to increase their knowledge of the growing market and brush up on selling skills in order to provide clients with the best possible service. So, which qualifications are the most beneficial for IFAs in the protection market?

As all advisers should be aware, it is now compulsory to attain a basic qualification in order to give advice on financial products to the public. The most popular route is through the Financial Planning Certificate (FPC) examination, but IFA status is also possible through the Certificate for Financial Advisers (CeFA) paper.

Getting qualified

According to the Chartered Insurers Institute (CII), the overall aim of the FPC is to ensure that advisers attain a sound knowledge and understanding of the financial services sector which they can apply in order to service the every day needs of their clients. The examination costs £50 per paper, with course books and correspondence courses available from £25 and £95 respectively.

The other starting point for advisers is the CeFA examination.

Once the basic qualifications are out of the way, advisers can choose to increase their knowledge and skills by taking an advanced paper. The Advanced Financial Planning Certificate (AFPC), run through the CII, consists of one compulsory paper on taxation and trusts in addition to two further papers which can be chosen by candidates to cover particular areas which they wish to specialise in. The papers cost £100 each for non-CII members and £75 each for members and all three papers must be passed in order to receive the certificate. Although this is a voluntary qualification, it remains popular with advisers as it not only expands their knowledge of specific markets, but can help to give them a leading edge over their peers.

Raising standards

Steve Radford, public relations manager at the CII, says that the more advisers that choose to take advanced papers, the better it is for the industry as a whole. 'In general terms, more advisers are taking specialist exams as they want to demonstrate their professionalism and dedication to the advice they provide. It is only by taking more advanced papers that they can differentiate themselves from the mass market. From the CII's point of view, we want to encourage as many people to take qualifications as possible, as it helps to improve the overall standard of advice being given. So, it is good news that more advisers are striving to gain more qualifications for themselves,' says Radford.

Candidates can choose from a number of papers in the AFPC examination to allow them to specialise in specific areas. G10 covers taxation and trusts, G20 covers personal investment planning, G30 covers business financial planning, G60 covers pensions, G70 covers investment portfolio management, G80 includes long term care (LTC), life and health protection, H15 covers supervision and sales management and H25 covers holistic financial planning.

For advisers in the protection market, G80 is the most relevant paper. According to the CII, this paper is designed to help advisers identify when clients need protection for LTC, loss of income, ill health or death. It also widens knowledge of medical and financial underwriting requirements for different protection products and helps advisers understand when they should monitor individual clients' protection needs.

The syllabus for the G80 paper (which is detailed on page 26) also includes knowledge of NHS provision, including State benefits and local authority funding with regard to LTC. Candidates are also tested on immediate need plans, pre-funded LTC insurance and investment-linked LTC products. Other protection products examined include income protection, accident and sickness insurance, critical illness insurance, waiver of premium benefits, permanent and terminal illness cover, life assurance, PMI and redundancy insurance.

In addition to demonstrating a thorough knowledge of the products, candidates also need to answer questions regarding legal considerations ' including trusts and wills, underwriting ' including the implications of non-disclosure, product claims, regulation, consumer protection and codes of practice.

Reaping the benefits

With such a comprehensive syllabus, it is not hard to see how protection advisers can benefit from such in-depth learning. Once the AFPC qualification is gained, it also allows advisers to join the Society of Financial Advisers (SOFA). This, in turn, opens the door for members to take up to ten further papers which lead to the title of Fellow of SOFA, allowing advisers to have the letters FSFA after their name.

Once advisers have passed their basic qualifications, the Life Insurance Association (LIA) also offers an education programme that helps to guide advisers through the AFPC and go on to gain further qualifications which lead to a series of designatory letters. The LIA used to have its own set of qualifications, but decided to team up with the CII to provide one set of examinations, developing the FPC and AFPC papers. Once advisers become a member of the LIA and have completed the FPC paper, they are entitled to use MLIA(dip) after their name. Designatory letters of ALIA(dip) can then be gained when advisers pass the AFPC paper.

According to John Ellis, public affairs director at the LIA, designatory letters do act as an effective incentive for protection advisers to continue their education and work towards further voluntary qualifications.

'Being able to gain membership to the LIA and get designatory letters after your name is undoubtedly a big incentive for IFAs to acquire higher qualifications. We are always trying to encourage advisers to take more advanced qualifications as it gives them an in-depth knowledge, helping them to work to the best of their abilities.'

But with products and issues in the protection market moving so fast, Ellis says that the next challenge for the industry is to introduce a method of re-testing advisers once they have attained their qualifications in order to keep their knowledge and advisory skills up to date with the ever-changing market.

'The next move we are looking at is to introduce annual re-testing to help advisers keep up to date with the latest issues. Some advisers may have taken their exams seven or eight years ago, so it is vital that they keep up to scratch with current changes in the industry. We are discussing a possible online scheme at the moment which could act as a refresher course, but we need to look into it further yet,' says Ellis.

Aside from the AFPC paper, advisers may also benefit from taking the initiative to gain further qualifications in areas such as marketing and information technology (IT). With the internet playing an ever-increasing role in the protection market, an e-commerce qualification could also help advisers push their business forward. The IFS offers a number of different qualifications such as an MA in e-commerce and the CII offers a Certificate in IT for Insurance Professionals (CITIP) which helps candidates with no formal IT qualifications get to grips with computer systems and IT issues specific to the insurance industry.

As the saying goes, knowledge equals power. Gaining qualifications not only helps to improve the service advisers can offer their clients and help lift the standards of the industry, but with each qualification gained, another door is opened. With the protection market expanding and changing all the time, qualifications are key to helping advisers stay ahead of the game and survive in this increasingly competitive business.