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Is profit part of CPD?

Advisers have mixed views on whether courses focused on increasing profitability should be counted as continued professional development (CPD).

Friday, January 25th 2013, 8:00AM 6 Comments

by Niko Kloeten

The cancellation of a course promising to help advisers improve the profitability of their businesses by 20% has prompted some in the industry to question whether such courses meet the criteria for professional development.

Private Asset Management adviser Brent Sheather said the goal of CPD should be to benefit clients and teaching advisers how to make more money out of them did not pass that test.

“I would have thought that CPD was designed to make advisers better at doing their job.  CPD should be looking to remedy any deficiencies in an adviser’s advice.I reckon you could teach an adviser to be a good adviser in a day of CPD.  That’s all it would take as long as they remembered.”

Sheather also said the drive to maximise profit could be argued to be “consistent with bad advice” because advisers would be incentivised to place clients in riskier products with high fees.

Institute of Financial Advisers president Nigel Tate said courses focused on improving advisers’ businesses were a legitimate form of CPD, depending to some extent on the content provided.

“I’ve always been of the view that you can have all the ethics, quality standards and everything but if you go out of business your clients don’t benefit from your knowledge, care and skill,” he said.

“One of the issues that has been around in the past is that people see a different person each time and get confused.  By having practitioners that are financially viable consumers can benefit from consistency in advice, provided of course that it is good quality advice.”

Norman Stacey of Diversified said there was nothing wrong with business development as CPD but suggested putting some sort of maximum quota on how much could be counted towards advisers’ obligations.

The bigger issue, he said, is the variable quality of courses which devalues the “currency” of CPD credits.

“It’s a bit like carbon credits: some organisations are throwing them out very cheaply which deprecates their value.”

The FMA said that while AFAs might attend training for “a wide variety of purposes, including business development skills”, they must ensure their CPD is relevant to the financial services they provide.

“AFAs are in the best position to judge their learning and development needs and therefore the degree of relevance of the courses they elect to attend.

“Their record of CPD activity must demonstrate clear links between their own financial adviser services and practice, their individual development needs and the CPD activity undertaken by them.”

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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Comments from our readers

On 25 January 2013 at 9:09 am R1 said:
I was considering signing onto a financial analysts paper at a university which takes 12 months to complete, requires regular travel to the campus and of course considerable costs.

I thought that this was Professional Development that was relevant for me and my clients. Now I understand I can do a marketing course at the local poly with less hassle and costs and chalk it up as CPD even though this is not likely to have any direct benefit to the client; in fact it could be to their detriment if it is simply used to extract more income for me.

I wonder if my doctor can do this too? I don't think so.

No wonder they are generally held in high regard and the advisory industry is at the other end of the scale. The public perceptions are our reality, like it or not. Let's take the 'high road' to success.
On 25 January 2013 at 12:55 pm brent sheather said:
Well said r1. CPD in NZ is apalling but that wouldn't be an issue if advisers embraced best practice.
The sad fact is many don't and profit growth CPD does nothing to address this.
When the tide goes out again watch for those advisers swimming in the nude.
On 25 January 2013 at 4:41 pm Graeme Lindsay said:
The word "profit" is not a profanity!

I am becoming tired of holier than thou comments that suggest that a businessperson's addressing anything that might make herself or himself more profitable to be something approaching a capital crime!

I suggest to you that, following on some of Nigel's comments, a professional adviser's first obligation is to be in business next year to provide the promised service. If she or he is not profitable, they won't be in business and the client will lose out! If you are not making a profit, you're making a loss and will be out of business before you know it!

So please, be proud of who you are, of what you do for your clients. Stop apologising for being successful.

CPD that helps advisers run their business more effectively/efficiently can only be better for all concerned, including clients!
On 28 January 2013 at 11:54 am brent sheather said:
Re Graeme Lindsay's comments: It's a while since I did the ethics exam but I seem to remember something about putting the clients' interests first and no mention of profits.
With annual fees typically consuming one third to one half of a balanced portfolios total long term return CPD courses should be offered which reduce fees not increase them.
On 29 January 2013 at 8:37 pm Graeme Lindsay said:
Hi Brent - I have no argument with the ethical requirement to put the client's needs/interests first, that is fundamental to professionalism; but, I suggest that the ethical obligation to clients is not in conflict with the need to be profitable. Don't get me wrong - there is no justification for recommending a product that is not in the client's best interest - so the professional is duty bound to ascertain the client's needs and then determine the best fit from the products on offer. That does not mean choosing a product that pays greater remuneration!

Profitability is about maximising revenue and minimising our expenses without compromising our professional obligation to clients!

I don't think that my original comments implied reducing the returns to clients.

CPD courses should add to the adviser's knowledge, skills and competence, and for investment advisers, that may result in an increase in long term returns, but that is not the only subject that should be covered in quality CPD.
On 30 January 2013 at 10:47 am brent sheather said:
fair enough ! rgds brent

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