[Weekly Wrap] To CPD or not to CPD?

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One of the big stories on Good Returns this week was the debate over whether registered financial advisers need to do CPD (continuing professional development).

Friday, February 1st 2013, 8:49AM 2 Comments

by Niko Kloeten

We reported the view of some RFAs that education providers are "scaremongering" about CPD requirements in order to make money, or at least cut their losses (because several providers dramatically overestimated how many authorised financial advisers there would be). 

The issue here is that while AFAs have clear CPD requirements, the picture is murky when it comes to RFAs, who still have the general requirement to be competent to do their job. 

Whether this requires them to attend CPD courses is a topic of debate; as some commenters have pointed out, risk advice isn't as complex as investment advice and information from product suppliers could be argued as sufficient.  Perhaps this could be a future FMA guidance note.

Another story involving RFAs this week was around a government review of the Financial Advisers Act, which includes the question of whether RFAs should be given a different title. 

There is some concern that RFA implies a professional status or qualification, when in reality it means people have put themselves on a list.  We have reported previously that the FMA is cracking down on advisers using "RFA" as part of promotional material, which raises the question of why bother having the designation at all. 

PAA chairman Peter Leitch is one who doesn't think the RFA designation needs to be changed.  But it could be argued that in the regulated environment the term "registered financial adviser" is as redundant as "registered teacher" or "registered doctor": when dealing with these people the assumption is that they are allowed to take part in the industry. 

Amid all the discussion about RFAs, AFAs were also in the news, with a prediction that there could be a big increase in the number of AFAs this year.  There is no question that a number of advisers qualified and capable of becoming AFAs are sitting in QFEs, for a variety of reasons. 

What isn't clear is how many there are and how many of them would be willing to become AFAs, which wouldn't necessarily mean them breaking ties with whichever QFE they are with and striking out on their own.  A number of non-QFE KiwiSaver providers are increasing their AFA presence to help promote their products. 

Another discussion point this week was the risks of social media use for advisers.  In a regulated world they have to be careful what they say online, because the same rules of the Financial Advisers Act apply.  The difficulty with social media is its informal nature, which can lead people to say things they wouldn't say face-to-face, or in the case of advisers, to forget things they are meant to say.  

And a prominent fund manager says it is "inevitable" commission for advisers will be banned in New Zealand.  This would mean issues when it comes to KiwiSaver, due to the small balances making fee-based advice unviable.

Other stories for advisers this week included the challenges of investing in emerging markets and dealing with KiwiSaver buyouts.

There are a couple of new jobs listed this week, too, and some movement on the people front at Spicers, Fidelity and Newpark.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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