Financial advisers told not to rush on CPD credits
Financial advisers have been told not to be deterred by the volume of professional development requirements that are imposed on them.
Tuesday, February 7th 2023, 6:11AM 
12 Comments
by Eric Frykberg
Instead, they should meet their obligations bit by bit.
Risk and compliance expert Cecilia Farrow told a Financial Advice NZ webinar that just passing tests to earn Professional Development credits was not enough.
“This is where you have to be brutally honest with yourself,” she said.
“(You have to ask), am I just meeting expectations or am I really missing the boat on this, and I have got a lot of work to do.”
Farrow listed 10 sets of rules, that advisers needed to focus on. They governed things like establishing proper relations within the office and with clients, meeting regulatory requirements, keeping proper records and other obligations.
The rules “are a tool that can help you lift your advice path to success by giving you a process to identify your personal development areas,” Farrow said.
“One of the key things about a professional development plan is that it is not just about your technical knowledge.....it is as much about your soft skills such as communication, relationship-building, teamwork, consultative selling skills....all these things form part of your competence.”
Farrow urged advisers not to try to do everything at once, but to focus on two to four rules over the next six to 12 months.
“For me, if I was doing this for myself, the ones I would decide to focus on would be the ones where lower performance has a greater negative impact on either the sales success of my business or my compliance requirements.
“This is because if I am failing in meeting my regulatory and compliance requirements, and I was audited, I could lose my licence.
“If I am failing because I am just not as competent in my softer skills....and it is pulling down my conversion and engagement ratios, then I am sure that would be a priority for me to focus on as well.”
Under the Code of Professional Conduct (CPD) for financial advice services, advisers must do a set amount of study for each 24 month period. This would include time spent studying ethics.
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The statement that ends the piece above "Under the Code of Professional Conduct (CPD) for financial advice services, advisers must do a set amount of study for each 24 month period. This would include time spent studying ethics." is just plain wrong.
The Code neither specifies a set amount nor that ethics CPD is compulsory.
In our SIFA Code submission we submitted having no Code included was a mistake - our thinking was that the Associations and compliance peddlers would simply outbid each other on the required amount of CPD to show each was better than their competitors.
As I read the Code it is open to each FAP/adviser to determine their own CPD requirements - dollars to donuts there will be arguments in time between regulators and individual advisers over CPD sufficiency.
I know of a small mortgage advice transitional FAP license holder continually bombarded by Strategi training group for the FAP to complete course after course before they applied for their full FAP license, it got so bad that the Mortgage advice business owner was seriously considering shutting the doors.
If the cost of regulation was going to be this expensive year in year out it was becoming uneconomic to run a mortgage advice business.
This Class 2 FAP business originally did their level 5 papers through strategi @ $ 3,232 plus GST per adviser.
Then Strategi said they must complete and purchase an Operations Manually @$ 3,000 plus gst,
Then a Governance course $ 2,350 plus GST
Then a close the caps course (x2 ) at $ 1,000 Pus GST
Then a Pre FAP license application compliance audit ranging from $ 2,800 plus GST to over $ 6,000 plus GST.
All this before the FAP business has even applied for their full FAP license.
For only say two advisers this is already a cost of over $ 20,000 which is insane for business based on commission and have 27-month commission claw backs imposed by lenders.
Clearly Strategy do have a financial agenda when it comes to regulation to extract as much money out of adviser business as possible for continuous additional study that they are not required to do to operate as a Financial Advice Provider.
But wait there is more, on top of this the largest dealer group is charging and extra $ 300 per month ($ 3,600 pa) on top of existing dealer group fees for “on going auditing “for being under a group FAP license.
There is clearly no auditing being done by this dealer group at all and time will tell that the lower caliber of advisers will certainly hide under a group FAP as it will be near impossibly for such a large group to even get close to maintaining/monitoring minimal expected standards, but they are certainly charging for it.
I also hope this large group is not “clipping the ticket “with Strategi training group by forcing members to purchase all their training and compliances needs via Strategi and Strategi paying the group for this business.
On top of this the Banks are also making advisers adhere to their own version of compliance which just feels like a double up on what advisers are already doing independently.
Keeping in Mind this is all in a drive to give consumers more advice options and more choice about where they can get independent advice, but independent advisers may be too bogged down at the moment getting hit left and right by banks, training providers and greedy dealer groups so customers will just have to click a button on line and lock in a rate or investment with no advice or human contact what so ever, perfect , just the industry the FMA wants to strive for.
The problem here appears to be the author mixing up code stuff and FANZ requirements.
FANZ members must do a certain number of hours PA, and some ethics stuff for the Trusted Adviser mark.
The answer to your question is yes - the compliance consulting industry. They are surely the puppeteers of MBIE and the government.
But I know your question was really about advisers!
your post reminded me the story of two cows. one of which says - " If you have two cows, you keep the cows and give the milk to the Government; then the government sells you some milk"
Hmm, seems to state, and I’m paraphrasing here, “Ensure you’re qualified to the required level, ensure you're competent for your advice area(s), and ensure you have an understaning of the regulatory frame work”
Which means as an adviser, and FAP, you need to be able to demonstrate these points to the FMA if called upon.
Anything more is noise from the training providers trying to justify their existence.
Is there a gap between the current Level 5 papers and Code Standard 9? Yup, but that can be managed in a demonsterable way with the FMA updates service…
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