Financial Services: Trained to be the best: Big financial groups are setting high standards for their advisers, says Paul Gosling

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The Independent Online
Prospects for recruitment in the financial services sector are looking brighter, according to the latest quarterly survey conducted by the Confederation of British Industry in conjunction with Coopers & Lybrand. The survey found that job losses had reduced markedly, business activity is rising strongly and will continue to rise, and job losses in the next quarter will probably come to a virtual standstill.

Meanwhile, it has been predicted that up to 2,000 independent financial advisers could be driven out of business by the introduction of the Personal Investment Authority. Bad news for the independents could spell good news for those interested in becoming sales representatives for the leading companies.

But many people considering a change of career into financial services are likely to be concerned by reports that Norwich Union has had to send its 600 direct sales force back to school. So will new entrants be given adequate training to become effective financial advisers? Yes, say the big companies.

The Life Assurance and Unit Trust Regulatory Organisation (Lautro) last year identified shortcomings in quality controls in Norwich Union's training scheme. This was not so much about the quality of training, say Norwich Union, as the recording of the training having taken place. Lautro lays down that company representatives must demonstrate 'threshold level competence' enabling them to analyse investors' circumstances to provide best advice, to present information comprehensibly, and to be administratively efficient. Once this standard has been achieved a representative may begin selling.

Basic training approved by Lautro involves theoretical learning, which takes at least two weeks, and on-the-job training, taking another six weeks or more. But companies with a good reputation for training, like Allied Dunbar, regard it as an on-going process which lasts throughout the working life.

While all companies must meet Lautro's requirements, some pride themselves on doing more. Friends Provident's core curriculum includes a two to three week induction course in the branch, plus a two-week induction course at head office. These aim to provide staff with a grounding in regulations, the principles of financial services, the tax and social and security system, knowledge of the products, as well as how to sell them.

The on-the-job training puts theory into practice. The new employee starts making observed calls, accompanied by the manager and regional trainer. The employee will be given feedback on quality of work, and in Friends' case, the process takes at least eight weeks. Even after reaching threshold competence, the employee continues to be monitored through tandem calling on at least one occasion a month.

Lautro has to approve the training arrangements for each company, including periodic inspection, which is where Norwich Union's problems were detected. Companies can face stiff penalties if staff are poorly trained. Legal & General were fined pounds 400,000 by Lautro for poor selling practices in 1991. A former Legal & General salesman, interviewed this month by the Independent, says that he received only 12 days' training before he began advising clients on investments, pensions and mortgages. Lautro believes that could not happen now.

Lautro's new system was in place for April 1993, implementing proposals published a year earlier. Jeff Abbott, national manager, sales training, for Standard Life (one of the companies highly regarded as a training provider by Lautro) says: 'I can remember thinking how much work was likely to be involved. As far as Lautro was concerned the case was clear-cut. Standard Life, like every member company, was given until 31 October 1992 to provide a detailed report of the training arrangements that would be in place by April 1993.

'Failure to produce a report by the deadline meant that Lautro could not guarantee approving the scheme prior to the official implementation date,' recalls Mr Abbott. Companies that did not have approved training arrangements in place could not recruit new representatives. Existing staff were required to also meet minimum levels of competence by the end of last year.

Mr Abbott believes that the Lautro tests create a good minimum standard for company representatives. 'During the initial phase we concentrate on two main areas which Lautro refers to as the core curriculum - knowledge and skills. Each company rep is provided with Oracle - up to 16 knowledge manuals, depending on the products they will sell - and a study guide which acts as a route map.

'All the study modules are signed off by a supervisor, and each company rep has to pass a series of computer based tests taken on a laptop or personal computer. The company rep will be asked a total of 260 questions, and the pass mark is 80 per cent.'

After completing the Oracle tests the trainee representative is required to attend a three-day sales course, and then an assessment programme, or validation test, where the trainee is assessed on the basis of role play exercises. They are expected to build contact with a client, accurately to establish the client's circumstances and to present the right advice. Only then does the representative begin on-the-job training, under tight supervision.

'During on-the-job training, most company reps will attend a third course, a two-day programme which introduces the financial planning software, using the laptop. At the end of the course company reps are given a series of test cases to prepare, ready to sit another validation test, this time on laptop usage,' said Mr Abbott. From then on, supervision is less close, though representatives are subject to continued training.

Royal Insurance believes that it is most appropriate to set the training according to the individual's own level. 'We look at the needs and skills of trainees,' said Cameron Thomson, assistant manager, public affairs. Even when a person is working as a representative, training continues, related to the outcome of annual assessment. 'We use performance-related pay, and after the appraisal for a year, and as part of that appraisal, training needs are agreed with the manager. A mixture of on-the-job, and for- the-job training,' explains Mr Thomson.

A lot of Royal's training programme uses computer-based, and other distance learning training. The company is currently exploring the use of National Vocational Qualifications, and hopes to use the Investors In People scheme to continue to improve its programme.

Most of the companies admit their training is not yet perfect, and is evolving. So job applicants might find it sensible to ask potential employers about training provision to ensure that they are happy with it.

(Photograph omitted)

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