Pensions companies themselves say the trend was already under way before the mis-selling problems emerged, driven by a tougher regulatory regime imposed by the Personal Investment Authority (PIA). The PIA requires independent and tied financial advisors to have passed the Financial Planning Certificate (FPC) exam, and the companies must operate an effective system of compliance monitoring. Some firms have also encouraged staff to pass an Advanced Financial Planning Certificate, though the regulator does not as yet require staff to be qualified to this level.
A tougher regime has led to cut-backs in the numbers of sales people employed by some companies. Legal & General employs fewer than half the number of sales staff it did, and recruits few new employees. Most new staff are poached from competitors, saving the costs of training them.
"Changes made in recruitment have been as a result of changes in the regulatory system over the last 10 years," says Legal & General spokesman John Morgan. "The number of company representatives has halved from 10 years ago. There is a shift to greater professionalism. We wanted people who were better at doing the job, not just from a regulatory point of view. Compliance has become part of the culture.
"Recruitment has tended to be intra-industry. We look for more committed individuals who are good in the round at doing the job in terms of salesmanship, and in terms of providing good advice to the consumer - people who give good and compliant advice to further business."
The best people, who will often be graduates, will be given good remuneration packages, says Mr Morgan. This is equally true of its telesales staff based in Cardiff as it is of staff who meet customers face-to-face.
The Co-operative Insurance Society employs one of the industry's largest direct sales forces, with 6,500 representatives. It says the biggest improvement to overcome mis-selling was achieved when the PIA became the regulator, creating a stricter regime. "Our training arrangements are more sophisticated these days, and take notice of the needs of the PIA," says David Mott, spokesman for the CIS.
"Training goes a long way to eradicate problems," he says. "We do have our intake of graduates, which helps get people through FPC 3 [the final part of the FPC examination]. That is the criterion we work to. Our objective is to get all of our people through FPC 3, not splitting our representatives between advisors and collectors, which some in the industry are doing. We are taking on good quality people, many of whom will be graduates."
The Prudential, though, says it has focused more on improving internal training than on altering recruitment practices. "We have not specifically changed recruitment," says spokesman Kevin Russell. "There has been no complete overhaul of the selection of the sales force. The FPC has been a means of proving the competence of an individual adviser and whether he or she should be out there selling products and giving advice. The changes have not been a direct consequence of mis-selling."
FPC examinations are set and adjudicated by the Chartered Insurance Institute, which says the basic FPC is below degree standard, but that the advanced examination is roughly degree level. It has noticed a discernible improvement in the quality of examination candidate.
"Standards have increased," says Steve Radford of the institute. "With the number of graduates there are out there, the more likely companies are to go for them. You don't need to be a graduate to complete an exam like the FPC, it is a test of benchmark competence. People who are really serious will move on to the advanced FPC. That is getting more demanding, for someone who has a lot of experience. Someone of graduate calibre will find these more easy to get through.
"The sector is attracting more graduates than in the past, with enhanced employment opportunities. Salaries are increasing for people who are FPC- qualified, which are higher than for people who are not. Employers are looking for more graduates. The number of degrees offered by universities in financial planning - there were four or five just five years ago, now there are 25 to 30 - shows there is obviously a demand for this type of course."
Some pensions providers talk privately, though, of their fears that they may be unable to hold on to graduate recruits. They fear that selling pensions and insurance products may not be exciting enough in the long term to hold the best staff. The favoured means of retaining potential high flyers is to review the ways of giving good staff promotion opportunities as well as regular salary reviews, even if this conflicts with now established management practices of flat hierarchies.
The pensions industry is going through a major change. Not before time, as many within it would agree.Reuse content