RFAs should be qualified: Survey
Registered financial advisers (RFAs) should have to meet minimum qualification requirements, according to an industry survey.
Tuesday, February 19th 2013, 6:00AM 
12 Comments
by Niko Kloeten
There are no qualification requirements for advisers to become registered, but if they want to become authorised financial advisers (AFAs) they have to pass the National Certificate in Financial Services Level 5.
But an industry-wide survey by training body the Skills Organisation (formerly known as ETITO) has found about two thirds of respondents thought the level 5 qualification should be the minimum level of qualification for RFAs as well.
The survey included AFAs, RFAs, advisers who operate in Qualifying Financial Entities (QFEs) and some non-financial advisers working within AFA firms who are not operating as AFAs, such as lawyers and accountants.
Overall there was no desire on the part of the majority for additional qualifications in the field; but respondents were divided over a range of issues including the need for a higher level entry qualification.
Roughly a third wanted it at a higher level, a third did not, and the remaining third of respondents were undecided.
The Skills Organisation survey also found mixed views on the relevance of level 5’s content to the AFA role and the need for ongoing learning beyond the level 5 qualification.
The Level 5 qualification was rated second in terms of usefulness behind only the Diploma in Personal Financial Planning or Risk Management, with the Master of Finance or applied Finance seen as the third most useful.
Of all the groups surveyed AFAs found level 5 the least useful (24%) and preferred the diploma (39%), while RFAs were happiest with level 5 (36%) and had the lowest rating of the diploma (21%).
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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Comments from our readers
On 19 February 2013 at 9:05 am Old Timer said:
I'm an RFA (with over 40 years in the industry)and would have no problems with having to pass a level 5 qualification - but you can't be serious when you suggest the current National Certificate in Financial Services is appropriate!
The 1st step should be to design at least 3 separate qualifications; one for each of Investment, Insurance & Mortgages (or Debt). A case might also be made for a 4th in Estate Planning. I would foresee that some of the content content would overlap.
You would then have individual designations for each such as Qualified Investment Adviser, but to achieve Qualified Financial Adviser status, you would have to qualify in all 3(4) disciplines.
This would have 2 significant benefits; 1)make it 100% clear to the public just what areas an adviser is qualified to operate in and 2)remove this consistent & persistent -ve debate over Authorised and Registered.
However, that would take some work and, given that the existing qualification, although significantly flawed, was chosen because it was an "easy" option, I don't hold out much hope for sense and logic to have much of a chance.
On 19 February 2013 at 9:52 am btw said:
What a complete waste of resource. This survey demonstrates an appalling lack of understanding about what the RFA regime is about. It is not a licensing regime. It is a register. Nothing more.
Everyone conducting financial services business in this country, licensed or unlicensed, needs to be on that register. The primary driver for this is the OECD/FATF requirements (for AML/CFT). If we don't do it we get blacklisted (which is probably where we should be anyway given the high and increasing level of money laundering in this country).
So you can’t treat a registration system like a licensing system in other words, and the register applies to many more people than “unauthorised AFAs”. Futures dealers, fund managers, trustees, stockbrokers, etc are all “RFA”s.
On 19 February 2013 at 12:30 pm bill said:
In terms of complaints, a disputes scheme official told me recently the complaints are coming from life insurance and mortgages, not investments !
Presumably the complaints are mostly in the RFA arena.
The words "financial adviser" infer some sort of qualifications, so they should change the title, or require some qualifications
On 19 February 2013 at 1:24 pm w k said:
@old timer: We are of the same mind, and I think we are not alone. This idea was suggested to the previous Minister in charge, Simon Power. Only need some cow sense to work that out.
@btw: Agreed. Wondered who paid for the "survey" or more accurately, the "shifting of responsibilities".
On 20 February 2013 at 1:10 pm Zak said:
Old Timer i concur - specific qualification by industry would be useful. Time in the saddle while useful can always be improved with relevant and highly targeted study. On 20 February 2013 at 2:24 pm Andrew said:
I'm going to look at this from a consumers perspective. The current designations are confusing and misleading. I agree with BTW that RFA relates to a registration only, however it does mislead consumers into thinking "this person is a Financial Adviser" when in fact they may have no skills, training or competence at all, they are merely registered on a list. If I jump on a plane and the Pilot says "I am a registered Airline Pilot", my assumption is that he is a trained, accredited and authorised pilot, not just someone named on a list and keen to start flying. Secondly, if there are multiple areas of competence (Insurance, Mortgages, Estate Planning and Financial Planning)these need to be clearly demarcated for the public in the designations we provide advisers. The term Financial Adviser is too broad to encompass all these areas without relevant training (My Pilot, if qualified, is either a Fixed Wing or Rotary Pilot, or both... but don't try fly Helicopters if you only have your fixed wing license)... There should be clear Qualification requirements for each area, I suggest the term RFA should be canned and all registered persons should be given an RFSP number (Registered Financial Service Provider) which shows your registration ONLY for clients and enables monitoring and complaints procedures etc. This doesn't allow you to provide advice, it simply registers you. To provide advice you need to meet the minimum qualification criteria in the area (or areas) that you want to practice in... If my broker is only accredited in Mortgage Advice or Insurance Advice, his designation should tell me that i.e I'm an Authorised Mortgage Adviser, don't call yourself a Financial Adviser until you've sat some exams and can prove your competence in that area. On 20 February 2013 at 3:19 pm Stan Walker said:
Andrew. Yes. Copy it and send to Sean Hughes please. On 20 February 2013 at 7:06 pm w k said:
Good Luck guys.
I also suggested to Simon Power, the then Minister, advisers should have some form of identification on their name card, eg. life insurance adviser / life & general insurance and mortgage broker / general insurance agent / life insurance and investment adviser, etc. (can be salesman, consultant, representative or whatever, and of course, advisers have to pass the respective exams first). He heard me, but didn't listen. Either 30 years' experience isn't enough or too small a fry to be bothered.
On 21 February 2013 at 10:21 am Andrew said:
@Bill, The words financial adviser don't infer anything. Use of the words may imply some sort of qualification. An inference is done by the receiver of the message. So a customer hearing the words financial adviser may infer from that
some sort of qualification.
On 22 February 2013 at 9:44 am Bill said:
Exactly my point.
A customer hearing the words financial adviser may infer (most probably does) from that some sort of qualification.
Infer or imply - an English teacher might see a difference, but Joe Bloggs consumer won't
On 25 February 2013 at 10:25 am Andy said:
Andrew and WK - I totally agree. Get rid of the RFA designation, and reconsider the AFA title to denote the specialist training: Investment, Retirement, Estate Planning, Mortgage, Personal Risk, etc... I wouldn't trust my doctor to perform brain surgery. I have never classed myself as a Financial Adviser - that is a big package to carry. I deal with Mortgages and personal risk, and am suitably qualified (30 years experience and a relevant diploma). I fail to see how the ETITO courses or current offerings can give me a better in-depth understanding of the products or markets.
There are suitable courses available already through Massey and even polytechs. Let's use those rather than wasting more taxpayer funds and our time and money!
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RFAs are meeting a demand with neither, causing few problems, & ETITO should cease exhorting & extorting.