Taking professional bodies out of the equation 'a boost'
Moves to require structured continued professional development credits to have credentials beyond merely being provided by a professional body will give genuine organisations a boost, the Institute of Financial Advisers says.
Wednesday, October 9th 2013, 6:00AM 
19 Comments
by Susan Edmunds
A revised draft of the Code of Professional Conduct for Authorised Financial Advisers was released last week.
It has tweaked the CPD requirements so advisers need 30 structured hours over two years.
But to count as structured hours, the training must be provided by a qualified educator or relevant subject matter expert, and must have identifiable aims and outcomes that fit with the adviser’s development plan. It must not be training designed purely to promote a particular product.
IFA president Nigel Tate said there was a fine line between technical training and promoting a particular product, particularly when it came to insurance products and providers offering the information that advisers needed to compare them. “There’s an area of greyness about that.”
But he said the removal of the reference to “training provided by professional bodies, DAOs and QFEs” from the code meant that there would not be such a lot of discussion over which organisations qualified.
Having to provide evidence of the quality of the training provided would be good for the industry, he said.
“Irrespective of who provides it, if the training meets those standards, I’m happy. I don’t think we should restrict it to tertiary providers and DAOs. But the problem has been who is a professional body? There are several entities setting themselves up as professional bodies. I’m of the belief that getting rid of the professional bodies reference will be good for the real professional bodies.”
He said the IFA would be seeking clarity on the definitions of “qualified educator” and “relevant subject matter expert”. “How do you determine that?”
Tate said it seemed strange that training that counted as structured for one adviser because it fitted in as part of their development plan, would not then qualify as structured for someone sitting next to them who had a different plan. “Each course can swing from being structured to unstructured, depending on the recipient.”
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Comments from our readers
On 9 October 2013 at 10:21 am Ally said:
I don't understand why all AFAs should have to do the same amount of CPD. Surely an advisor who only offers investment *or* risk does not require the same amount of training as one who offers investment *and* risk.
On 9 October 2013 at 2:51 pm Barry Read said:
Hi Ally
Good Point. The code states the minimum standards and the revised code states 'an AFA must undertake such additional training as is necessary to maintain competence at the appropriate level..
On 9 October 2013 at 6:58 pm Ally said:
So, logically, this must be the requirement under the proposed Code:
A specialist “Risk” advisor must do 30 hours of CPD over 2 years to maintain competency in his area of expertise.
A specialist Investment advisor must do 30 hours of CPD over 2 years to maintain competency in his area of expertise.
Therefore it follows that an “All purpose” AFA would need to do 60 hours to satisfy the Code requirements.
Agree ?
On 10 October 2013 at 8:01 am Barry Read said:
No I don't agree. There are so many variables that there can never be a one size fits all rule. A minimum requirement is set and advisers now need to judge their own requirements based on the financial advice service they provide and how they provide them.
The Professional Associations can provide members with guidance in this area.
On 10 October 2013 at 9:09 am Educated AFA said:
In my experience I often find the training and provided by Professional Bodies, fund managers and service providers to be far more valuable than prescriptive education than the education industry. I wonder if these changes have been bought about by lobbying from educational organisations who have not achieved the business growth they anticipated.
Let's face it, when you are an educated and experienced AFA it most important to keep skills and education up to date rather than take courses where you could equally be the trainer. For example as an investment adviser it is important for me to attend regular economic briefings to help keep up to date on what is happening in the markets and global trends. This kind of education cannot be obtained from the education industry.
Let's face it, there is a limited amount of time to spend on education if one is also going to run a successful business and look after clients. It would be a real shame if this time had to be spent paying educators to gain points rather than doing what is really important.
We are at risk of Structured CPD Credits only being available if we pay for them and if we undertake courses that add no value to our businesses or our clients.
Without doubt the education industry would welcome the position where we can only get CPD credits by buying courses from them!
On 10 October 2013 at 2:06 pm Brent Sheather said:
Hi Educated AFA
I find it hard to believe that as an educated AFA you can derive any benefit from training provided by "Professional Bodies, fund managers and service providers". My guess is the reason you might think they are better value for money is that they are "free". If you really want to put your clients first I think you need to do CPD provided by unbiased providers with no particular axe to grind and be guided by best practice as evidenced by the behaviour of professional trustees. Because these strategies don't maximise revenues they are rarely, if ever, provided by the organisations you refer to. The sooner the regulatory bodies realise this the better and the new Code suggests they may have.
On 11 October 2013 at 10:50 am Ally said:
Brent, perhaps you can enlighten us as to who these "unbiased providers" are and, more importantly, whether they will be able to issue CPD credits. I think this is a concern advisors have: just where am I supposed to access this 30 hours of structured CPD ? On 11 October 2013 at 11:58 am 6ftndr said:
For an AFA that does risk and investment, I doubt you could get away with 30hrs of risk credits and none from an investment perspective - go the better way and do 15 hrs every other year for both, ie 7.5hrs per year each On 11 October 2013 at 12:01 pm Giles Thorman said:
I would suggest that something that is free has to be better value for money.
I have been in this Industry for 30 years now and have attended numerous courses and Industry based training; some in-house and some from outside providers.
The best one I have attended in New Zealand was one provided by Sovereign a few years back called "Top Gun", not so keen on the title, but the course headed by the excellent Allan Mearns was a real eye opener. I have been to other very good ones, just not at that level in my opinion.
I would be very interested to learn Brent where you have gained all this inside knowledge to be an authority on the workings of the IFA, PAA, IBANZ as well as every training course the Insurance Companies offer?
I have also attended a number of excellent two or three hour sessions run by Steve Wright where he has concentrated on helping brokers get information to clients in a clear and concise manner.
Not all the training provided by Insurers is product based or a sales pitch and to claim that it is just goes to show that people should get their FACTS straight before launching into print.
On 11 October 2013 at 3:25 pm Andy said:
Brent, I partially agree, but I tend to support Educated AFA more. Still only designated as RFA, I spend considerable money each year on attending market related discussions, seminars and training courses.
I keep up to date with economic happenings through the numerous blogs and reporting media web-sites available.
No training entity would be able to provide this as it is up-to-date, and market related. The education I get is of huge benefit to my clients, in that I can reasonably accurately forecast interest rate paths.
I also attend the free lunches put on by product providers - they are also important so that I can keep up with the constantly changing products. I fail to see how a dedicated training facility could even dream of keeping up with such a fast changing economic environment.
The legislation is changing faster than the needs and expectations of our clients!
On 11 October 2013 at 5:08 pm Brent Sheather said:
Hi Ally
I’m with you on this. There are no unbiased trainers, as far as I can see, and thus little or no training worth doing if your benchmark is doing training which will bring your advice closer to best practice. There is of course tonnes of free advice from providers selling esoteric, high cost, irrelevant products which introduced tracking error and thus take clients portfolios further away from “doing the right thing”.
I have no solutions but recognize the problem.
Regards
Brent
On 11 October 2013 at 5:11 pm Brent Sheather said:
Hi Giles
I have no knowledge of insurance, have never heard of the PAA or the IBANZ so god knows who they are but have seen quite a bit of IFA sales advice masquerading as CPD and note that just about every advisor who has come before the courts of late seem to be a member of the IFA. We can add their names to the list of IFA notables in Gareth’s book. So their track record is another reason for my skepticism as to the IFA’s ability to provide worthwhile CPD. Personally I don’t think they have got a hope and in the unlikely event that they come up with any sensible training none of their members would buy it.
Regards
Brent
On 12 October 2013 at 1:13 pm Educated AFA said:
Hi Giles, I agree with you, the Sovereign Top Gun Programme was some of the best training I have had, it was provided by a product provider, but was in no way bias. I never liked the name either, but the content was excellent and I still use this in my business every day and this course was many years ago. I have never found any training that came anywhere near this valuable from a training organisation.
Brent, you've been around a long time and I am very surprised to discover you have never heard of the PAA or IBANZ. The PAA is a true Professional Body, I am a member of both the PAA and the IFA and get value from both. That said I am picky about the meetings I attend, trying to pick those which will add most value. Though I confess to going to some simply to make up my CPD Credits, something I find frustrating.
I'd be interested to know if you are a member of a Professional Body Brent.
On 14 October 2013 at 11:31 am Brent Sheather said:
Hi Educated AFA
I should have made clear that I have no knowledge of insurance or insurance training, CPD etc and any comments I make on this site relate to investment only.
As regards associations I belong to I joined the NZ Society of Investment Analysts back in 1986 after completing a year’s course through Canterbury University.
This body has devolved into INFINZ which I am a member of and I am also a member of the American Finance Association. Having said this none of these organizations contribute much to my CPD. I keep up to date by reading the London Financial Times, hard copy daily, the Financial Analysts Journal from the US, the Journal of Finance from the US, the Economist Magazine and a real estate magazine from Wharton, which I can’t remember the name of, plus lots of other specialist papers which I pick up from here and there.
There is tonnes of good CPD out there … the problem has been getting the regulatory authorities to recognize it and problems in verifying that you have read it.
Regards
Brent
On 14 October 2013 at 12:19 pm Giles Thorman said:
Hi Brent,
You admit you have no Insurance knowledge, yet I suggest that a significant minority of IFA members are solely involved with Insurance solutions.
Every time you or one of your colleagues berates the IFA for some investment indiscretion you feel they have committed you also berate all of those Insurance Advisers who are members of the IFA. I do not like my Industry to continually be unfairly criticised any more than you would like the same to yours.
I would also like to correct you as to what you said in your original post, you did not as you claim in your response to me that you have doubts as to the IFA's ability to provide training; you extended this scepticism to "Professional Bodies, Fund Managers and service providers". You then admit you have never even heard of two of the professional bodies you state cannot provide this service and ignore the statements of others who state the Insurers have in the past (and I am sure in the future as well) provided some excellent non product related training.
If you wish to comment knowledgeably and add to the debate then please get your facts right and learn a little more on about the whole Industry rather than one facet of it.
On 14 October 2013 at 2:28 pm Brent Sheather said:
Hi Giles
Fair comment but two points and some advice.
Firstly, my view that CPD from industry bodies like the IFA is deficient is not just my view … it looks like the Code Committee thinks the same.
Secondly, with due respect, I’m not sure that insurance professionals are best qualified to assess the attractiveness of CPD offered if you define attractive CPD as being CPD that helps advisors do the right thing. For example are you commission or fee based?
Some advice – I have never seen the logic of investment and insurance professionals hanging out together. So given the issues you refer to about IFA investment orientated members transgressions perhaps you should cut your losses and join a pure insurance oriented industry body.
Regards
Brent
On 14 October 2013 at 4:37 pm Educated AFA said:
Hi Brent, I guess you find it difficult the to acquire the required amount of CPD Credits, as you say the regulatory authorities do not recognise the knowledge you gain from reading journals; in fairness I guess that's very difficult for them to measure.
Which brings me right back to my original point, the to gain the "approved" CPD Credits we need to undertake educational activity that does not necessarily add any value to our businesses or our clients.
It is particularly unfortunate (in my view) when we have to pay to score CPD Credits, when our time would be better spent gathering up to date knowledge and information, e.g. from reading journals as you have stated.
We need to be credited with getting our education from multiple valuable sources without the need to purchase prescriptive courses from an education provider that are often dated and of marginal value.
On 15 October 2013 at 9:37 am Brent Sheather said:
Hi Educated AFA
Yes I certainly do find it difficult, if not impossible, and believe that if I did many of the courses offered and actually followed their advice my recommendations would disadvantage clients relative to what I am currently doing so not good at all. However the new Code looks like it might address this particularly if I can prove by virtue of my Herald articles that I have read and thought about articles from journals I have read.
Regards
Brent
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The "Skills" Organization is a dodgy shop.