Questions over minimum standards for AFAs
Is Level Five enough? That's the question industry training body ETITO is asking the financial services industry in a wide-ranging questionnaire on adviser qualifications.
Thursday, April 12th 2012, 6:44AM 
8 Comments
by Niko Kloeten
The National Certificate in Financial Services Level 5, developed by ETITO, is currently the minimum qualification for those wanting to become Authorised Financial Advisers.
However, ETITO is canvassing the industry as to whether this is the appropriate standard, or whether the bar needs to be raised.
Its Financial Services Professional Development survey asked respondents to rate on an eight-point scale how strongly they agreed with certain statements, including "There is a need for a higher level (than Level 5) as the minimum standard for the AFA designation."
It also asked respondents to rate the statements that Level 5 "is pitched at the appropriate level expected of a minimum qualification for AFAs" and that it "should be minimum qualification for both RFAs and AFAs."
The survey asked respondents what type of adviser they were, what standard sets of the National Certificate of Financial Services (Level 5) they had completed, how worthwhile they were and who paid for the training.
Another question involved the business relationship between ETITO and the Financial Markets Authority, with respondents being whether they perceived "ETITO is part of the FMA" or "ETITO is totally independent of the FMA."
Michael Frampton, ETITO manager - strategy and corporate relations, has previously warned that the minimum of 20 hours continuing professional development prescribed by the Code of Conduct for AFAs wouldn't be enough for many advisers.
Frampton couldn't be reached for comment yesterday.
An adviser Good Returns spoke to was bemused by the tone of the questions around whether the minimum standard should be increased, saying ETITO would stand to benefit from such a change.
"It's a bit like asking, ‘do you still beat your wife?' If you answer yes they say ‘why?' and if you answer no they say ‘why not?'"
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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Precisely. How many times are we going to see Michael Frampton & the ETITO harp on about "minimum standards" when the real impetus has nothing to do with improving advice to consumers (the reason for regulation of the financial services industry in the first place) Many advisers would by now be getting a little sick and tired of the blatant “self-serving” agenda been pushed continuously by training organisations like the ETITO on this subject. ETITO clearly “banked” on a lot more potential revenue from the industry than they have actually earned to date and now seem to be pursuing a campaign for their betterment. It’s all looking a little desperate!
In my opinion, the field of "Financial Advice" is so diverse that one size fits all doesn't even begin to work. Sure it all deals with money but then so too does retail sales and I can't think that anyone would suggest that sales assistance at your local dress shop should be included.
The "competence,knowledge & skill" required by any adviser will be directly related to the areas they give advice in and for many areas that would be nowhere near a degree level; for example mum & dad insurance or KiwiSaver.
However, I wouldn't argue against a far higher skill level required for lump-sum investment.
I also couldn't follow the argument about registration through an industry body and the list. Don't we have to be registered on the FSPR?
Headmaster says "The minimum qualification then ought to be a tertiary degree in finance/commerce, applicable to the single designation of Registered Financial Adviser,with registration through an industry body as is the case in so many other fields" and then lists a number of occupations only some of which require a degree.
Let's make it simple - everyone registered as "Financial Adviser (field(s))" with study & qualification relevant to that field.
e.g. Financial Adviser (Investment, Life Risks, Mortgages)
That way the client will know exactly what the adviser is qualified to give advice on.
Someone tell me, when was the last time advisers came up with brilliant idea/s was/were adopted by the regulators? They asked for "suggestions and feedbacks" just to go through the motion. This is to show that they are "open" to ideas, really? All i can say is that everything has already been decided way before that. You think the regulators will listen us advisers? It's like wait till India or China beat all blacks in the rugby world cup.
First 20 hours CPD aren't enough. Now Level 5 isn't high enough. Next will probably be a plaint that there should be 26 hours in a day.....
The qualification entry level and the minimum CPD requirement are the concern of the Code Committee, not the Industry training body.
Given that the new regime is only 9 months old, and there don't appear to be a lot of consumer complaints, surely the old adage "if it ain't broke, don't fix it" should apply.
I hope the modern equivalents of Gaius Petronius's targets don't get to hold sway until I have retired.....
Unfortunately they are currently running amok and the old adage "ignorance is bliss" has never been more applicable. The same applies to Real Estate agents who hold themselves out to be investment specialists.
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ETITO needs to be removed from the financial advisory space altogether, as it is just an embarrassment. The minimum qualification then ought to be a tertiary degree in finance/commerce, applicable to the single designation of Registered Financial Adviser, with registration through an industry body as is the case in so many other fields.
In New Zealand, registration through an industry body is required by law in order to undertake employment in a wide range of occupations, including:
Medical Practitioner
Solicitor
Pharmacist
Dentist
Chiropractor
Architect
Nurse
Plumber
Veterinarian
Teacher
Surveyor
Optometrist
Electrician
Physiotherapist
Real Estate Agent
So, what does that suggest: ____________ Financial Adviser.