All about application & analysis

Raising the educational qualifications for financial advisers has generated misunderstandings, says GILES CUTHBERT. The Institute’s Director of Professional Standards puts the record straight.

Right from the start, we’ve seen the RDR as an exciting initiative that chimes entirely with the Institute’s aims of raising levels of professionalism and competence in financial services. But its importance drives deeper than that.

The FSA’s commitment to ethical codes of conduct for those giving financial advice demonstrates a very clear understanding of the critical progressive links between professional behaviour, customer trust and your own empowerment as a professional adviser.

The key to RDR is that it’s all about “me as a professional. That’s such an important change away from the view of ethics merely as some kind of tick-box component in the compliance process, towards an active acceptance of ethical conduct as a desirable professional virtue.

To us, this comes as absolutely no surprise. After all, we’ve been examining banking ethics for quite some time, so we’ve got a lot of experience in the best ways to test the appreciation of ethics which informs so much of the RDR.

Right now, for example, I suspect that there’s quite a widespread misunderstanding about the practical meaning of raising the basic educational qualifications for financial advisers to QCF Level 4. Some assume that you’ve now got to acquire a whole lot more abstruse knowledge.

This isn’t so. In reality, very little of the new standards is about a change or increase in knowledge; a great deal is about a change to the application of knowledge and the analysis of a customer’s needs so as to give a better, more informed service. If you compare the new learning outcomes with the old ones, you won't see much change in terms of additional knowledge. The real change is in how you use and apply that knowledge.

And that’s precisely what makes the Institute’s approach unique, I think: we’re not asking people to study thousands of pages of obscure data. We’re asking them to show that, when they’re in front of a customer, they can give the best possible advice because they really do understand how their professional knowledge applies to that particular individual’s circumstances and needs.

This approach is pivotal both for new entrants and – critically in current circumstances – to the up-skilling of those already qualified to QCF Level 3 who want to meet the new Level 4 standards. The “top-up” route for these advisers culminates in our Diploma in Investment Planning.

Particularly for qualified advisers, I repeat, the big distinction in educational terms is not around amounts of knowledge – or even, as a matter of fact, about the number of study hours this might take. It’s about how you can apply that knowledge and analyse the customer and product information you have in front of you.

In demonstrating your competence, we also have an online “gap analysis” tool so that you can track where you are in your learning – and banks can get the essential MI as a measure of the varying pace of development of different students. That’s a more meaningful way to manage this challenging process than to insist on a crude reckoning of study hours, which is bound to vary from one person to another and gives no guarantee of the quality of advice given.

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