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Do you match the profile of the adviser industry?

A snapshot of the financial advice industry has revealed the face of the country’s adviser force is changing.

Wednesday, April 24th 2013, 6:00AM 3 Comments

by Susan Edmunds

The Skills Organisation, which offers qualifications for the industry, has issued a report based on a series of online interviews with industry participants.

It found that almost half of those surveyed were self-employed, although there was a lot of differentiation between subsets of the industry.

Most of the self-employed advisers were offering risk advice.  More than two-thirds of advisers offering only investment advice were employees, and 66% of those offering services such as KiwiSaver, estate planning and fund management were employed.

It found 14% of authorised financial advisers (AFAs) were offering only insurance advice, for which they need only to be registered. Almost 40% of them received a salary and 37% earned commissions. Another 17% received a combination of the two methods combined.

Of registered financial advisers (RFAs), 64% offered insurance advice and 33% were involved in lending. Two-thirds earned only commission. The insurance advice industry was primarily self-employed.

QFE staff were mostly involved in insurance advice (43%) and lending (37%). More than half earned a salary – probably reflecting the fact that a lot of them are bank staff. Employed QFE staff were particularly strong in offering advice on retirement savings and lending.

Most of the advisers had a long tenure in the industry - 75% had been a financial adviser for more than 11 years and 41% had 21 years or more under their belts.

Women are coming into the industry in greater numbers. While they make up only 7% of advisers who have spent more than 31 years in the industry, they are almost half of new advisers, primarily offering lending advice and financial planning information.

The survey found that 51% of AFAs had completed the National Certificate in Financial Services level 5 (NC5), compared to 32% of RFAs  and 44% of QFE advisers. RFAs were less likely than AFAs to think the qualification worthwhile.  AFAs in particular thought a diploma in personal financial planning or risk management was more worthwhile, although RFAs rated it less important than NC5.

It found 44% of AFAs had a degree and 31% of RFAs.

Most advisers thought the NC5 should be a minimum qualification for all advisers but 59% said there was a need for higher levels of qualifications.

Of RFAs, 36% said they would become an AFA at some point in the future. But 48% said they did not want the regulatory responsibilities of an AFA although they wanted to show clients and regulators that they had the credentials and ability to do the job. Many RFAs did not see the financial benefit in becoming an AFA.

One said: “I had planned on attaining AFA status but after doing a cost/benefit analysis, it became obvious that the income streams were not adequate to justify, and concern about the litigation risk going forward.”

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Comments from our readers

On 24 April 2013 at 4:53 pm Amused said:
Based on past feedback and experiences of advisers to date (see the many comments posted on Good Returns) most would argue that a company like The Skills Organisation (formerly ETITO) is far better off spending its time correcting the errors in the course material they teach. Conducting online surveys of advisers and issuing reports is all well and good but surely the first priority for a training company should be the accuracy and relevance of the course material been taught to people. Just a thought.
On 26 April 2013 at 11:29 am Brent Lewis said:
Well said Amused. I found that some of the content was totally irrelvant to the course taken. Maybe they just wanted some extra material as filler.
On 26 April 2013 at 12:40 pm RFA and highly Qualified said:
Given my experience of the ETITO not taking responsibility for gross errors in course notes I would not believe a word of anything they said.

As a RFA with multiple Tertiary Qualifications and ongoing CPD from study and ongoing courses I am disappointed in their assertions that RFA's are less interested in qualifications.

It is possible that, like me, they have no faith in the ETITO and do qualifications that suit their area that they work in outside ETITO.

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