Financial Advice NZ ponders questions of experience in Trusted Adviser consultation
How the Financial Advice New Zealand Trusted Adviser mark will recognise adviser experience is a question being ironed out through the association’s consultation on the mark.
Wednesday, August 5th 2020, 6:00AM 
10 Comments
Sue Brown
The plans for the mark, which have been part of the association’s plans from the outset, were unveiled in June.
A Trusted Adviser of Financial Advice NZ is a member who has been accepted as having a level five qualification or higher, three years’ experience providing regulated financial advice, a minimum of 20 hours’ CPD a year, completing a three-hour ethics workshop every three years, and holding appropriate adviser-level professional indemnity insurance.
Board chair Sue Brown told a webinar discussion about the mark that it could not be finalised until the new regulatory regime was clear. That will take effect from next March.
She said what the board had settled on would be meaningful for advisers and consumers but was also achievable for all Financial Advice NZ members.
Chief executive Katrina Shanks said the requirements for the mark were higher than for the industry as a whole. The new code of conduct only requires advisers to demonstrate outcomes equal to someone who has completed the level five qualification in financial services.
The mark will require the qualification itself or a higher one.
But she said the feedback so far had questioned whether experience should also be recognised.
Whether a member who did not have a qualification but who had a significant number of years of experience should be deemed to have met the qualification standard was an area to consult on, she said.
There were also questions about whether founding members of Financial Advice NZ should be able to be grandfathered in if they had experience.
She said a survey showed 93% of respondents supported the idea of the mark and 71% thought they already met the criteria.
Shanks said the association would promote the mark with a consumer campaign but it would have to remember that there would be members who did not have the mark.
“It’s important to get the balance right between people seeking financial advice from Financial Advice New Zealand and also the public understanding there’s also, on top of that, another mark as well. It doesn’t mean they’re not trusted but they’ve made a different commitment.”
She said she had no doubt that over time the requirement for the sector would be a level five qualification, because of the FAP structure of the new regime.
“That will evolve over time anyway. Do we put that in place now or wait for the evolution to happen?”
Brown said she hoped that within a few years, the mark could be entry-level criteria for the association.
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Comments from our readers
We really are grasping at straws aren’t we to differentiate this “Trusted Adviser mark” when we start making statements like the above saying that advisers won’t automatically be completing a level five qualification as part of licensing. So I guess the only difference then is the completion of a three-hour ethics workshop been done every three years. I’m pretty damn sure you can’t teach ethics to someone who might be ethically challenged already.
Sorry back to the drawing board Financial Advice NZ. You’ll need to find another marketing pitch to remain relevant to advisers and consumers under the new Financial Services Legislation Amendment Act.
A number of AFAs (me included) do not actually have the level 5 qualification because there were equivalent qualifications for some parts of the AFA hurdle e.g Sets A C and D.
Anyone who thinks this is enough for giving advice with the necessary skill and diligence required does not understand what it takes to give even moderately acceptable advice.
I remain disapponited. When every adviser qualifies (as they surely will) this 'mark' will mean nothing to anyone.
I like the idea of someting advisers can strive for to exhibit their superior abilities, but this must be a stretch not a gimme.
The standard of general competence, knowledge, and skill is that the person has capabilities equivalent to the general qualification outcomes of the New Zealand Certificate in Financial Services (Level 5) version 2 approved by the New Zealand Qualifications Authority in January 2019 (NZQA reference 2315). The general qualification outcomes are qualification outcomes 1-4 of that certificate.
A person may demonstrate their general competence, knowledge, and skill by any of the following ways:
hold version 1 or 2 of the New Zealand Certificate in Financial Services (Level 5, hold the National Certificate in Financial Services (Financial Advice) (Level 5)
was an authorised financial adviser immediately before the commencement of the Code
give financial advice only through an individual who satisfies any of the ways stated above.
While it's not explicit in Level 5 paperwork, the education standard is equvilent.
But, like many have commented Level 5 is a bare minimum and does not convey anything.
The CWG have basically said a CLU still needs to do level 5 for the regulation compliance rather than the advice bit. I’d read that as doing core and using the CLU for the rest, but that’s my opinion.
Frankly, my view is the education requirement should be CLU or CFP not level 5. And I have neither so no vested interest in saying this.
This would give those that don't have it an incentive for the higher learning and would also address some of the trust issues raised in the comments.
I'd also suggest setting the bar on experience at 5 years as 3 still has trainer wheels.
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Is it genuinely 25 years of learning and associated experience that has developed and grown the individual or is it a rinse and repeat 25 times of the first year of sales BS.