On the right track

The path to professionalism for the IFA is a lonely and uncertain one. While qualifications are in place, which IFAs must hold to meet the regulatory requirements of the FSA, which of these must be held is not always clear.

Within the minefield of qualifications available to an IFA, are the varying perceptions of what makes a fully competent IFA. Also, there is the public perception that the IFA is not a professional at the same level as a solicitor or an accountant.

Professional bodies are eager to advise and assist the IFA and insurance companies are keen to offer training and support. At the route of all training requirements are the basic qualifications an IFA must hold to demonstrate their proficiency.

The basic qualification of an IFA is the Financial Planning Certificate (FPC) which consists of three papers. There is also an Advanced Financial Planning Certificate (AFPC), which consists of three papers, one of which is compulsory, the other two selected by the IFA to meet a particular specialism they may have. AFPC is, broadly speaking, an optional paper designed to allow the IFA to further demonstrate their proficiency. It is, however, the entry requirement to the Society of Financial Advisers (SOFA), which is part of the Chartered Insurance Institute (CII). IFAs who take a further 10 papers become a Fellow of SOFA.

Whether an IFA sees holding the FPC or becoming a Fellow of SOFA as a demonstration of their professionalism is a debatable issue. But of some significance is the academic measure given to these qualifications.

Peter Williams, training manager for Scottish Equitable and vice president of the CII, explains: 'FPC is the minimum requirement for IFAs and is the entry point as a qualified adviser. The exams are seen as GSCE standard. AFPC papers, however, are marked to honours degree standard.'

An issue for the IFA is not so much what is required of them, rather how they want to be seen by their peers and by other professionals.

'The more knowledgeable you are and the better able you are to demonstrate that knowledge, the better advice you will be giving,' says Williams.

The problem, however, is where to find good training support. Most insurance companies offer training. Scottish Equitable, for example, offers training for all FPC papers and some of the advanced papers. The reason insurance companies spend time and money training IFAs is simple, according to Williams: 'Our sole distribution channel is IFAs. The better qualified the adviser is, the better advice they are giving. We are not doing this for philanthrophic reasons, but for sound business reasons.'

Meeting demand

The training on offer is there largely by demand, whether from individual IFAs or a firm. IFAs that come to Scottish Equitable for training come through contacting local branches, or from a firm who contact the insurer requesting a course for a team of advisers.

Not all training is exam based either. Depending on the insurer, courses can be offered on sales techniques or particular product ranges.

The various IFA networks are also heavily into providing support packages in association with insurers. But IFA Ruth Whitehead points out: 'The content of these packages varies from being very helpful to a waste of time.' Whitehead is a member of The Financial Options network which, with the input of Misys, now offers training support which has gone up several notches in quality and professionalism. 'There has been a notable increase generally in the standard of presentation from insurance companies,' says Whitehead. 'I used to take a book along to some of the seminars we were offered ' actually, I still take a book along, I just do not read it so often.'

Generally, insurers will not levy a charge for training. Most training is carried out at the insurance companies offices, and while the IFA must pay to get themself to the session and pay for any overnight accommodation, the course itself will be free.

There are exceptions to the unwritten no-charge rule, however. An IFA firm or body which has requested a bespoke course and wants the venue to be held somewhere other than the insurer's offices, in a hotel for example, would normally be expected to cover the cost of the hotel.

Neither are there restrictions on to whom the training is made available. Under FSA regulations, if insurance companies are providing training and support they must provide it for everyone. While it is likely an IFA would approach an insurance company with whom they have had dealings with anyway, they should not find themselves shunned because they have not had a certain level of business with that insurer.

Another source of training and competence assistance is the Institute of Financial Services, part of the Chartered Institute of Bankers. The Institute provides qualifications for financial advisers, primarily the Certificate for Financial Advisers. Additional papers include the Personal Investment Certificate and the Certificate of Mortgage Advice Practice, also recognised by SOFA as one of the optional papers advisers can select to meet Fellowship requirements.

A number of other professional bodies are also available to help or advise on support and training matters for IFAs. The Association of Independent Financial Advisers (AIFA), the IFA trade association, encourages high standards in training and while it does not offer training itself, it has been heavily involved in collaboration with those who do offer training to create consistency across the industry. AIFA can also provide bulletins of trainings and seminars available.

The General Insurance Standards Council (GISC) which regulates the sales, advisory and service standards of its members ' mainly insurers, intermediaries and brokers working in the general insurance market ' holds as its benchmark qualification the CII's Insurance Foundation Certificate and the Certificate of Insurance Practice for those in a supervisory role. The GISC also recognises the Institute of Financial Services' Certificate of Financial Services Practice as it includes a module on general insurance. The GISC can advise on other qualifications appropriate to its members needs, although it provides no specific training itself.

Keeping up

Ongoing training to maintain competence is expected of advisers in the form of Continuing Professional Development (CPD). The minimum CPD requirement used to be 35 hours per annum. The requirement now is that 'appropriate CPD hours' are met. CPD activities include reading specialist trade publications, attending courses and presentations held by professional institutes and other interested parties whose training events qualify for CPD points. It is the responsibility of an IFA firm to keep records of the CPD of its advisers, and the regulators can act if advisers cannot demonstrate they are keeping up with their training.

CPD needs to be more structured, according to Ruth Whitehead, which is something most networks can help with. As Whitehead points out, setting up and maintaining an effective CPD structure takes time which should ideally be spent on clients.

A warning to IFAs taking on only the minimum of training is that if the industry itself does not set its own standards, they will be stipulated for them.

'The regulator keeps FPC as a benchmark for qualified IFAs,' says Peter Williams, 'although the FSA is said to be reviewing the minimum requirements and is likely to raise the standard above FPC.'

Ruth Whitehead would like to see more input from the industry into degree standard qualifications in financial services. 'There is no faster changing environment, with the possible exception of computing, than financial services,' she says. 'We need to move away from a structure of training which relies on exams. We need something more modular, more flexible from an academically respected source.'

For the time being it seems the IFA must set their own standards of professionalism. 'If we could wave a magic wand and get every IFA to take AFPC we, as an industry, would be taking ownership of our profession,' says Williams. 'SOFA members are doing that, but we need everyone to do it.'