Being an AFA 'isn't good enough'
Too many financial advisers think just being an AFA is enough, speakers told a conference in Auckland yesterday.
Tuesday, October 29th 2013, 7:55PM 
13 Comments
by Susan Edmunds
The Institute of Financial Advisers held a Certified Financial Planner Professional Day.
There, it revealed data about the experience of those with CFP designation, and those who employed them. A study found that 40% of advisers received a promotion, got a new job or started their own practice after becoming certified. Almost 70% grew their client base. More than 90% retained clients for longer.
CFP is roughly equivalent to an undergraduate degree and advisers at the event said it was significantly more difficult to obtain than AFA status.
IFA president Nigel Tate said: “It’s not cheap to become certified so if we can show then that what they spend has value, the hope is that some more will take up the designation.”
About three-quarters of firms that hired CFP advisers said they were a lower compliance risk.
Tate said too many people were only ticking the boxes the FMA required of them and not bothering to tackle any further qualifications. CFP numbers have declined over recent years, from a peak of about 412 to 372.
The drop in CFP advisers had coincided with the introduction of regulations, with the accompanying increased costs. Tate said some had started to come back but about a dozen had opted out of keeping up CFP designations because of cost.
Tate said a lot of countries had baseline standards but IFA members should not see themselves as equivalent to that. The challenge was to show people the value in extra qualifications, he said. “We wanted to bring in CFP because we don’t want people to be the minimum.”
Noel Maye, the chief executive of the Financial Planning Standards Board, said striving for extra qualifications was part of what had to happen for the the industry to be recognised by others as a profession. He said almost all of the financial advisers in China – where the industry is growing immensely – had university level qualifications.
But he said there were other changes that needed to happen too, such advisers not being so quick to criticise their peers.
Studies had shown that while people trusted their own adviser, they did not trust the industry as a whole. He said it was very rare for doctors to bag each other. “But we pile in there. It’s a great opportunity for us to change the dialogue and find a way to move forward.”
Maye said professional bodies needed to represent a clear voice in each country. “If we can’t get our house together, it’s hard to get consumers and regulators on board.”
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CFP designation: not considered as a high quality requirement by some IFA members
CPDs: the awarding of these by industry bodies currently under question
...just what does the IFA offer?
We recently received our grade back for the final Massey assignment which is to construct a comprehensive SOA from a case study. The average mark was 48%, meaning half the class cannot write a compliant recommendation... Is this proof that most advisers attempting the CFP course are retarded, or that the CFP is outdated and out of touch with reality.
To those looking to undertake the CFP course, remember Nigel's comment, "It’s not cheap to become certified...” Make sure you weigh up the costs versus the 50% fail rate, it's not a walk in the park like many think.
I don't believe the CFP qualification is held in such high regard because it has been "superceded" by the desire to be AFA qualified first and foremost. If the regulators wanted more qualified advisers then the CFP qual would have been mandatory.
How many of your current BNZ advisers carry the CFP qualification as well as an AFA? From memory I can recall probably around 5 off the top of my head from when I was there.
But he said there were other changes that needed to happen too, such as advisers not being so quick to criticise their peers."
How true is that!!!
This is an important issue so here are some thoughts:
First off if I was Chief Executive of the Financial Planning Standards Board and financial planning standards weren’t up to standard I would be upset at other advisers pointing out that I wasn’t doing my job. Secondly you don’t see many car dealers criticising other car dealers so I guess they must be a profession. In fact there is a Tui’s ad here – “Car dealers don’t criticise other car dealers so they’re a profession”. Yeah right.
So to answer your question “how true is that”, it isn’t true. If advisers put clients’ interests first there wouldn’t be so many of them appearing in Court. I just finished a job as an expert witness in a very big trial and the poor complainant couldn’t find anyone but me to testify against the intermediary concerned. This is a very sad state of affairs except we thrashed the defence and won our case on the basis of what was and what was not best practice.
From this I can see that the minimum requirement for certification is a grad DipBusStud endorsed Financial Planning, in looking at the 10 levels on NZQA I see this is at a minimum level which is equal to a Bachelors Degree (level 7), the Waikato Post Grad Dip PFP one is at Honours Degree level (level 8).
Having attended the CFP Professional Day which was an incredibly inspiring event and a glimpse into a truly professional future I see CFP as the future.
Better paid, better respected, keep Clients longer, lower compliance risk, the facts speak for themselves.
http://www.nzqa.govt.nz/assets/Studying-in-NZ/New-Zealand-Qualification-Framework/requirements-nzqf.pdf
I agree - being an AFA isn't good enough. But there needs to be a recognition of more relevant training, rather than loading more paperwork onto us (and the client) for no real return in value to either party.
I know several advisers who believe the AFA status is a badge of honour and makes them more worthy than an RFA. The AFA training has always been a minimum standard, and there has never been any recognition or reward for further learning; the system favours those who only achieve the minimum standards rather than those who have sought additional, more relevant education.
Again - I believe the AFA missed the mark entirely.
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Having done both qualifications I can say the undergraduate degree is considerably more detailed and carries more weight in the industry than the CFP accreditation.
I have recently relinquished my CFP status as I no longer believe it is necessary or held in such high regard as it once was.