No more dunce caps in financial advice

Sam Dunn reports on plans to raise standards in the industry

Paying a 17-year-old to give you professional financial advice on your retirement plans sounds a bad idea. Yet a school leaver can qualify as a financial adviser after just 12 weeks' training.

Paying a 17-year-old to give you professional financial advice on your retirement plans sounds a bad idea. Yet a school leaver can qualify as a financial adviser after just 12 weeks' training.

To be fair, he or she would have to study intensively for the Financial Planning Certificate (FPC), but, with hard work, a teenage candidate could in theory pass with flying colours.

"At 17 years old, you could technically be in front of the customer [selling products]," says Fay Goddard, director of policy at the Association of Independent Financial Advisers (Aifa). "However, it's extremely rare. Normally, training would take two years."

While you might be unlikely to come across a financial adviser who is too young to vote, the lack of barriers to entering the profession has long worried an industry that is fighting to salvage its reputation.

A succession of mis-selling scandals, from endowment mortgages to split-cap investment trusts and high-income "precipice" bonds, has left investor confidence in tatters.

Training for financial advisers - both independent and tied (selling products for just one company) - is now being overhauled, with plans for a revamped basic exam to be in place before the year end.

Many argue that such a shake-up is long overdue. Exposed, a recent report from the independent financial adviser (IFA) Bestinvest, highlights the shortcomings of the training currently in place.

"Compared to other professions, the qualifications for becoming an adviser are still relatively undemanding," it says.

Although further qualifications are required for specialists in the fields of pensions, trusts, investments and tax advice, for the rest of the profession they remain optional. In fact, most advisers have little incentive to build on the basics.

"Time spent studying for exams is time they cannot spend advising clients. Hence it represents lost income," the report adds. This issue lies at the heart of much mistrust of IFAs: when success depends on the volume of products sold rather than quality of advice, the consumer is in danger of being pushed into second place.

A Treasury Select Committee report on endowment mortgages noted that "the challenge ... is to develop a fee structure that rewards good investment returns and client retention rather than simply paying out high rewards for client acquisition". Many advisers are switching to a fee-based service but the majority still survive on a commission basis.

Of course, responsible members of the profession are keen to broaden their knowledge in order to give clients the best possible advice. A popular path is to work towards the Advanced FPC, which requires a pass in at least three specialist topics and is generally held to be as demanding as a univer- sity degree.

While the remodelled basic exam coming in later this year will set new standards, the dream for many financial advisers is to be considered on a par with lawyers and accountants. Although industry bodies such as Aifa are pressing for the profession to have chartered status, like accountancy, there is some distance to go.

So how do you tell if your adviser is worth his salt or just looking to cut a deal and run with the commission?

"Ask for a list of their qualifications and how long they've been in the business," advises Justin Modray of Bestinvest.

"A grey-haired adviser who looks as though he may have spent a lifetime in financial services might actually have just a few months' experience following a recent career change."

If you have a particular need, for example pension advice, ask about any relevant exams the adviser may have and their experience in that area. Ask if you can speak to their other clients.

Remember that, although a qualification over and above entry level is no guarantee that an adviser will give good, honest advice, it at least suggests a commitment to furthering their financial education.

Independent Partners: 10 top tips for retirement. Get your free guide here

Suggested Topics
News
The guide, since withdrawn, used illustrations and text to help people understand the court process (Getty)
newsMinistry of Justice gets law 'terribly wrong' in its guide to courts
News
Bobbi Kristina Brown with her mother Whitney Houston in 2011
people
News
Starting the day with a three-egg omelette could make people more charitable, according to new research
scienceFeed someone a big omelette, and they may give twice as much, thanks to a compound in the eggs
News
Top Gun actor Val Kilmer lost his small claims court battle in Van Nuys with the landlord of his Malibu mansion to get back his deposit after wallpapering over the kitchen cabinets
people
PROMOTED VIDEO
News
The actress Geraldine McEwan was perhaps best known for playing Agatha Christie's detective, Miss Marple (Rex)
peopleShe won a Bafta in 1991 for her role in Oranges Are Not The Only Fruit
News
newsPatrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
News
Robert Fraser, aka Groovy Bob
peopleA new show honours Robert Fraser, one of the era's forgotten players
Life and Style
Torsten Sherwood's Noook is a simple construction toy for creating mini-architecture
tech
Sport
David Silva celebrates with Sergio Aguero after equalising against Chelsea
footballChelsea 1 Manchester City 1
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    As in 1942, Germany must show restraint over Greece

    As in 1942, Germany must show restraint over Greece

    Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
    Britain's widening poverty gap should be causing outrage at the start of the election campaign

    The short stroll that should be our walk of shame

    Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
    Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

    Homeless Veterans appeal

    The rise of the working poor: when having a job cannot prevent poverty
    Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

    Prince Charles the saviour of the nation?

    A new book highlights concerns about how political he will be when he eventually becomes king
    How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

    How books can defeat Isis

    Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
    Judith Hackitt: The myths of elf 'n' safety

    Judith Hackitt: The myths of elf 'n' safety

    She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
    The open loathing between Barack Obama and Benjamin Netanyahu just got worse

    The open loathing between Obama and Netanyahu just got worse

    The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
    French chefs get 'le huff' as nation slips down global cuisine rankings

    French chefs get 'le huff' as nation slips down global cuisine rankings

    Fury at British best restaurants survey sees French magazine produce a rival list
    Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

    Young carers to make dance debut

    What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
    Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

    Design Council's 70th anniversary

    Four of the most intriguing prototypes from Ones to Watch
    Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

    Dame Harriet Walter interview

    The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
    Art should not be a slave to the ideas driving it

    Art should not be a slave to the ideas driving it

    Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
    Bill Granger recipes: Our chef's winter salads will make you feel energised through February

    Bill Granger's winter salads

    Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
    England vs Wales: Cool head George Ford ready to put out dragon fire

    George Ford: Cool head ready to put out dragon fire

    No 10’s calmness under pressure will be key for England in Cardiff
    Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

    Michael Calvin's Last Word

    Time for Old Firm to put aside bigotry and forge new links