Some advisers in for a shock: Trainer

Bigger financial advice firms are starting to upskill their staff ahead of the Financial Advisers Act changes, but small operations are still burying their heads in the sand, one training provider says.

Monday, September 5th 2016, 6:00AM

by Susan Edmunds

David Greenslade, of Strategi, said last month was the best his firm had had, as a number of financial advice businesses moved to get their staff started on a level five certificate.

“The surge has been massive. But it’s ironic it’s not the one-man bands, it’s the entrepreneurial networks who’ve identified what is required and are encouraging their advisers to move forward.”

Some who were planning to become financial adviser firms, employing agents, under the new structure were considering the level five certificate as a way to ensure those under their license had appropriate knowledge, competency and skill.

The recommendations from the Ministry of Business, Innovation and Employment, which will form the basis for the new-look Financial Advisers Act do not set a minimum qualification standard. That will be dictated by the code of conduct which will now apply to all advisers.

But Greenslade said the smaller businesses, with just one or two advisers, could be in for a shock. Some had suggested that because MBIE had not made it clear what the standard would be, they were off the hook.

Greenslade said that was not the case – it would be up to the code committee to determine what an acceptable qualification would be and the level five certificate was already a well-defined educational pathway for the industry.

“What will end up happening is they might not have the same personal liability an AFA has at the moment but there is no reason why they should not be required to have level five.”

The new level five certificate was a lot bigger than its predecessor, he said, and advisers would benefit from having time to work through it.

“There are some areas you could debate whether they will be required or not but you could start with the core product specialty and worry about the financial advice standard closer to the time once the ambiguity has been ironed out. If you start doing it now you are not going to have a major financial impact in the way of your work or a productivity hurdle – if you leave it to the 11th hour, which is typically what happens, you’re going to have a massive amount of work to cram into six months and your revenue will suffer.”

Strategi offered advisers the chance to just do the assessments without the course work if they were confident their experience would see them through. But Greenslade said none had yet done so.

“The problem is they don’t know what they don’t know in some instances.”

Tags: compliance Financial Advisers Act qualifications