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Being an AFA 'isn't good enough'

Too many financial advisers think just being an AFA is enough, speakers told a conference in Auckland yesterday.

Tuesday, October 29th 2013, 7:55PM 13 Comments

by Susan Edmunds

The Institute of Financial Advisers held a Certified Financial Planner Professional Day.

There, it revealed data about the experience of those with CFP designation, and those who employed them. A study found that 40% of advisers received a promotion, got a new job or started their own practice after becoming certified. Almost 70% grew their client base. More than 90% retained clients for longer.

CFP is roughly equivalent to an undergraduate degree and advisers at the event said it was significantly more difficult to obtain than AFA status.

IFA president Nigel Tate said: “It’s not cheap to become certified so if we can show then that what they spend has value, the hope is that some more will take up the designation.”

About three-quarters of firms that hired CFP advisers said they were a lower compliance risk.

Tate said too many people were only ticking the boxes the FMA required of them and not bothering to tackle any further qualifications. CFP numbers have declined over recent years, from a peak of about 412 to 372.

The drop in CFP advisers had coincided with the introduction of regulations, with the accompanying increased costs. Tate said some had started to come back but about a dozen had opted out of keeping up CFP designations because of cost.

Tate said a lot of countries had baseline standards but IFA members should not see themselves as equivalent to that.  The challenge was to show people the value in extra qualifications, he said. “We wanted to bring in CFP because we don’t want people to be the minimum.”

Noel Maye, the chief executive of the Financial Planning Standards Board, said striving for extra qualifications was part of what had to happen for the the industry to be recognised by others as a profession. He said almost all of the financial advisers in China – where the industry is growing immensely – had university level qualifications.

But he said there were other changes that needed to happen too, such advisers not being so quick to criticise their peers.

Studies had shown that while people trusted their own adviser, they did not trust the industry as a whole.  He said it was very rare for doctors to bag each other. “But we pile in there. It’s a great opportunity for us to change the dialogue and find a way to move forward.”

Maye said professional bodies needed to represent a clear voice in each country. “If we can’t get our house together, it’s hard to get consumers and regulators on board.”

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Comments from our readers

On 30 October 2013 at 11:38 am Craig Simpson said:
To say the CFP qualification is roughly equivalent to an undergraduate degree is absolute rubbish.

Having done both qualifications I can say the undergraduate degree is considerably more detailed and carries more weight in the industry than the CFP accreditation.

I have recently relinquished my CFP status as I no longer believe it is necessary or held in such high regard as it once was.
On 30 October 2013 at 12:26 pm Brent Sheather said:
Yes I couldn’t believe it when I read that “CFP is roughly equivalent to an undergraduate degree”. Comments don’t get much sillier than that. In the last ten years I have seen a number of plans that were extremely deficient and many of the authors were CFP qualified raising questions as to just what is taught in this course. It is very significant that the new Code no longer recognises the CFP qualification as regards Standard Set C. Regards Brent
On 30 October 2013 at 1:58 pm Curious said:
Annual conference: majority of this now operated by an external provider
CFP designation: not considered as a high quality requirement by some IFA members
CPDs: the awarding of these by industry bodies currently under question
...just what does the IFA offer?
On 30 October 2013 at 3:32 pm David Mason said:
@Craig Simpson, the hurdle for CFP is higher than purely AFA, which was the point being made by the panel yesterday (I was there). The comments regarding how the CFP is equivalent to a degree level qual are a bit of a red herring. I disagree that the CFP is not held in high regard, I just feel that our customers do not see the difference between an AFA or an AFA with CFP. It is up to all of us to push the benefits of advice from a CFP over that of an AFA.
On 30 October 2013 at 4:21 pm UniStudent said:
As a current student of Nigel's CFP paper through Massey, I must agree that the content is a damn sight more difficult than the AFA course.

We recently received our grade back for the final Massey assignment which is to construct a comprehensive SOA from a case study. The average mark was 48%, meaning half the class cannot write a compliant recommendation... Is this proof that most advisers attempting the CFP course are retarded, or that the CFP is outdated and out of touch with reality.

To those looking to undertake the CFP course, remember Nigel's comment, "It’s not cheap to become certified...” Make sure you weigh up the costs versus the 50% fail rate, it's not a walk in the park like many think.
On 30 October 2013 at 8:23 pm brent sheather said:
Just to clarify things uni make that comparison I assume you are a qualified AFA and that you sat Standard Set C. To remove doubt maybe you should give your name so we can check you on the AFA I don't think I have ever seen a SOA by a CFP that put client's interests first..ever.
On 31 October 2013 at 8:37 am Craig Simpson said:
@David Mason - agree hurdle for CFP is higher than AFA but that is not what is written (CFP is roughly equivalent to an undergraduate degree)and hence my comment.
I don't believe the CFP qualification is held in such high regard because it has been "superceded" by the desire to be AFA qualified first and foremost. If the regulators wanted more qualified advisers then the CFP qual would have been mandatory.

How many of your current BNZ advisers carry the CFP qualification as well as an AFA? From memory I can recall probably around 5 off the top of my head from when I was there.
On 31 October 2013 at 1:25 pm Jeff Goldsworthy said:
Until a designation (any designation) is recognised as an industry qualification, and not a Professional Body designation, it will never have true value in the open market. As long as a CFP or CLU designation is available only to IFA members, these designations will lack true market credibility. Until then, I will continue to strive toward by Grad Dip in Financial Planning and portray that as my qualification to my clients, over and above my Certificate of Financial Services (Level 5).
On 31 October 2013 at 3:58 pm Stephen O'Connor said:
"Noel Maye, the chief executive of the Financial Planning Standards Board, said striving for extra qualifications was part of what had to happen for the the industry to be recognised by others as a profession.
But he said there were other changes that needed to happen too, such as advisers not being so quick to criticise their peers."
How true is that!!!
On 1 November 2013 at 7:33 am Mark Baker said:
Well said Stephen.
On 1 November 2013 at 9:40 am Brent Sheather said:
Hi Stephen

This is an important issue so here are some thoughts:

First off if I was Chief Executive of the Financial Planning Standards Board and financial planning standards weren’t up to standard I would be upset at other advisers pointing out that I wasn’t doing my job. Secondly you don’t see many car dealers criticising other car dealers so I guess they must be a profession. In fact there is a Tui’s ad here – “Car dealers don’t criticise other car dealers so they’re a profession”. Yeah right.

So to answer your question “how true is that”, it isn’t true. If advisers put clients’ interests first there wouldn’t be so many of them appearing in Court. I just finished a job as an expert witness in a very big trial and the poor complainant couldn’t find anyone but me to testify against the intermediary concerned. This is a very sad state of affairs except we thrashed the defence and won our case on the basis of what was and what was not best practice.
On 5 November 2013 at 3:16 pm Luke McKenzie CFP & Proud of it! said:
All these anti CFP comments have encouraged me to research the NZQA site to see where CFPcm actually fits into the framework.

From this I can see that the minimum requirement for certification is a grad DipBusStud endorsed Financial Planning, in looking at the 10 levels on NZQA I see this is at a minimum level which is equal to a Bachelors Degree (level 7), the Waikato Post Grad Dip PFP one is at Honours Degree level (level 8).

Having attended the CFP Professional Day which was an incredibly inspiring event and a glimpse into a truly professional future I see CFP as the future.

Better paid, better respected, keep Clients longer, lower compliance risk, the facts speak for themselves.

On 20 November 2013 at 11:27 pm Andy said:
I am quite happy to do all the study necessary to become an AFA. However my own current qualifications and study far exceed these and are far more relevant to the advice I give. What would frustrate me as an AFA is the extra liability, bureaucracy and paperwork associated with the AFA qualification, all for the sake of someone else's shortfalls.

I agree - being an AFA isn't good enough. But there needs to be a recognition of more relevant training, rather than loading more paperwork onto us (and the client) for no real return in value to either party.
I know several advisers who believe the AFA status is a badge of honour and makes them more worthy than an RFA. The AFA training has always been a minimum standard, and there has never been any recognition or reward for further learning; the system favours those who only achieve the minimum standards rather than those who have sought additional, more relevant education.

Again - I believe the AFA missed the mark entirely.

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