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What is the value of CPD?

Continuing professional development does not offer much benefit for financial advisers, it has been claimed.

Thursday, March 26th 2015, 6:00AM 21 Comments

by Susan Edmunds

Authorised financial advisers are bound by the Code of Professional Conduct to complete 30 hours’ CPD over two years. But RFAs are only required to be competent to do their job.

It has been suggested the Financial Advisers Act review may increase what is required of RFAs. Already, several professional bodies require higher standard of their RFA members, including NZFAA, IBANZ and IFA. PAA has no set requirements but promotes CPD options.

Risk adviser Graeme Lindsay said those promoting CPD could be accused of self-interest.

“It’s a bit like education providers running around beating the drum prior to the implementation of the current regime, saying how important it is that we all get this education. It’s self-serving because they’re in the business of selling education.”

Lindsay said ongoing training was important for new advisers but once people had been in the industry a long time, there was less need. 

“There are a lot of very good people doing very good work in those areas but a whole lot are doing it for egotistical reasons. They’ll say 'you should do 20 hours’ CPD a year and we’ll sell you the CPD'. Put yourself in my position, I’m 66, I’ve been an adviser since January 1969. What are you going to teach me? It’s important to keep up with the product changes that come into the marketplace but I get that information from insurers and I’m analysing for my business that anyway.”

He said unlike doctors and accountants, who also have CPD requirements, advisers did not have to keep pace with such rapid changes.

“There’s not a hell of a lot that’s changing. [A push for] 20 or 30 hours of CPD is only there to put money into the pockets of the providers of CPD. I don’t believe it’s adding a lot of value for advisers.”

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Comments from our readers

On 26 March 2015 at 8:16 am Pragmatic said:
The attitude of “I know everything, what more can you teach me” is far too common, and a real issue for the industry. Those folks who don’t believe that they can continually learn, are a danger to their clients and are misunderstanding the dynamic nature of the global financial services industry. I emphasis ‘global’ as often NZ doesn’t feature high on the list of places for experts to present.

I’m not convinced that the CPD structure is the best solution – although it discourages the know-it-all community from doing nothing.
On 26 March 2015 at 11:44 am Dirty Harry said:
If CPD doesn't add value to your clients and your business you are doing it wrong. CPD providers are no more self-serving than us advisers who get commission for selling insurance saying people should buy insurance.

One trend over the 45 years since 1969 is the pace of change accelerating. Have a look at Russell's blog today and see if you still think "there's not a hell of a lot that's changing"
On 26 March 2015 at 12:14 pm R1 said:
I have nothing against CPD and with the dynamic regulatory regime within which we operate and the crappy AFA qualification we are subjected to there is plenty of scope to learn more so we can be up-to-date and better at what we do. My big issue is with finding CPD opportunities that are relevant, not tainted by self-interested providers and that provide real value; apart from signing up for a degree course which is overkill and too time intensive. Being obligated to do 30 hours under these circumstances is practically not possible and I think it is about time the FMA and academia filled this gap(AUT are doing their bit though but more needed). I don't want the industry's view of how things should be as it is mostly inconsistent with doing the right thing by your client. I need stuff around best practice principles of investment and operating an advisor service as well as options for keeping costs down for clients, etc., etc.
On 26 March 2015 at 1:33 pm John Milner said:
Pragmatic is right on the money. You're never too old to learn something new. This "I know everything there is to know" attitude is so yesterday.
On 26 March 2015 at 4:48 pm Brent Sheather said:
The reality of most CPD for AFA’s is that it has negative value in that it generally promotes specialisation and higher cost products which take portfolios away from best practice where best practice is the average portfolio of NZ pension funds. This is not surprising because advisers and fund managers and CPD providers can make more money from promoting overly complex solutions and nobody is going to buy CPD that reduces their profitability in the short term, let alone put clients’ interests first!

One of the stupidest portfolios I have seen recently was a US equity portfolio that had equal weightings in value and growth ETF’s. Duh …. what do you get … the US market which could have been purchased for a third of that price with one ETF. A solution probably inspired by CPD.
On 26 March 2015 at 7:15 pm gavin austin adviser business compliance said:
When I saw the article my first thought was I wonder how long it would take Brent to make a comment. I was slightly disappointed that it took so long but inevitably here we have the usual Brent epistle.
I was wondering if Brent could give us all some direction as to how he manages to comply with the Code Standards with regard to CPD.If you need a refresher Brent they are code standards 14 to 18. I get the impression that he doesn't value anything to do with CPD and might not bother. I would also challenge FMA to have some intestinal fortitude to go and audit him and publish the results.
On 26 March 2015 at 7:41 pm Pragmatic said:
Brent Sheather: What are you rambling on about?
On 27 March 2015 at 10:04 am Brent Sheather said:
I’m not sure how change impacts the quality of products for insurance but as John Bogle wrote in the FT the other day there is not much in the way of “new” products which are actually good for investors. Most innovations are actually bad for consumers and if you start with that proposition and … it is correct … then a lot of CPD offerings which are sales presentations for new products look pretty redundant don’t they. About the only innovation I can think of in recent years that was good for investors were ETF’s and the list of bad innovations would probably run for a couple of pages.
On 27 March 2015 at 12:19 pm Dirty Harry said:
Even though I was waiting for it, I still get heartily sick of assertions that pension funds are the only way, and nobody puts client interests first.
On 28 March 2015 at 10:55 am dcwhyte said:
With respect Pragmatic and JM, in this instance, G.Lindsay's point is fair. Where does a Risk Specialist AFA go for relevant CPD material? Company product launches don't qualify. I suppose he/she could enrol in Strategi's excellent business insurance course, facilitated by the very capable Barry Read - but with respect to Barry, in Graeme's case, he has forgotten more about Business Insurance than most have had time to learn. His point was not "I know everything" but where do I go to get risk specialist CPD points? Also, as you may know Graeme has developed, maintained, and distributed a comprehensive product analysis platform for the last 20+ years, so product knowledge is hardly an issue for him. I suspect he has many clients who will testify to his capability in addressing their financial risk management issues, so where does he go to obtain CPD points?
And Dirty Harry, from Russell's blog, I don't see how Apple's new smart watch would qualify as an item in a CPD course to assist Graeme solve his clients" business insurance issues!
On 30 March 2015 at 10:21 am R1 said:
I must say I like Gavin's idea of the " FMA to have some intestinal fortitude to go and audit him and publish the results", with one proviso, if it is appropriate for Brent Sheather then it should be appropriate for us all, including those who do audits; presumably like Gavin himself. Having recently been through a 3rd party audit I was astounded at how poor the process and reporting was. Picking up on things that could be improved but with no specific recommendations on what needs to be done. Got the feeling they wanted to come back and do a re-audit sometime soon to see if we guessed right on the best actions to take; all for $4k a time. These sorts of auditors need to be checked out for qualifications, experience and compliance to standards (if there are any; if not there definitely should be) and ex regulator/bank/industry employees do not make the best auditors, they have biases both toward people, organisations and technically. Auditing is a specialist field and we need qualified professionals if this is going to work and be seen to be credible; not AFAs or their like.
On 30 March 2015 at 2:21 pm gavin austin adviser business compliance said:
David - so in your words " Where does a Risk Specialist AFA go for relevant CPD material? Company product launches don't qualify".

I suggest you re read the code standards regarding CPD but in case you haven't here are the core elements.

"The Code defines structured professional development as "training that has identifiable aims and with outcomes relevant to the learning needs identified in the AFA's professional development plan and Structured professional development may include technical product training but excludes training provided for the principal purpose of promoting a particular financial product.

So where do you derive the view that Company Product Launches don't count- when they of course can depending on how smart the product provider is when putting the launch together. I am sure the product providers are onto this.

By the way Graeme doesn't need any CPD as he's an RFA not an FA and only AFA are "Required" to demonstrate they have done sufficient CPD-not that I am suggesting RFAs shouldn't do CPD - far from it.

AFA "RISK ONLY" will have plenty of sources for CPD once people understand the Code requirements (not a hard task either -in my humble opinion).
On 31 March 2015 at 11:21 am Brent Sheather said:
What all this discussion says to me is that there seems to be a lot of emphasis on doing CPD to meet the requirements of the Code which as people point out is quite easy. Actually doing some CPD that adds value is, in my view anyway, impossible if one limits oneself to the local CPD providers. Let’s be honest product launches aren’t CPD, improving the profitability of one’s business isn’t CPD and improving ones selling techniques certainly isn’t CPD. Our industry is never going to improve its image unless we get serious.

I agree with R1 and think we need an independent panel to assess the suitability of CPD providers and their content. I would be quite happy to be involved free of charge. For the record I get most of my CPD from overseas sources as these sources best fulfil the needs I have identified.
On 1 April 2015 at 12:16 pm dcwhyte said:
Gavin - maybe times have changed since I led AIA here and in Australia, but any product launches I ever paid for were for the specific purpose of "promoting a particular financial product" - overtly or covertly!
As Brent points out, product launches aren't CPD, or are you ascribing an esoteric dimension to life insurance companies marketing efforts since the Code was published?
I appreciate Graeme doesn't need CPDs, but ALL advisers are Registered, no? Some have chosen to subject themselves to the Authorisation requirements, and the question was posed asking where do 'risk only' AFAs go to acquire CPD points in line with the required PDP? If you could supply names and contact details, I'd appreciate greatly.
On 2 April 2015 at 9:00 am mitsilad said:
All professional bodies require CPDs. They are here to stay.
The real problem under the current regime is finding real & relevant learning opportunities.
I specialise in Fire & General insurance so as a RFA do not have a legislatively imposed CPD requirement. I do have a professional body requirement at a higher level than required by the FMA however.
I have done so for over 40 years. I have tutored relevant subjects, mentored fellow members and written course material.
While product changes the actual concepts have changed little.
On 2 April 2015 at 9:52 am dcwhyte said:
Thank you, mitsilad - my point exactly. There are many risk-only advisers who - if required - would easily attain AFA status. But I bet their legal adviser has counselled against taking a step which increases their legal liability exposure. Like you, as an F & G specialist adviser, life risk specialist advisers struggle with finding credible sources from which to obtain CPD points. I agree CPD is healthy and necessary, but the Code and the regulations were drawn up with investment advisers in mind - non-investment advisers were swept up in the rush to enact legislation. Now the FAA is up for review, there is enough time and opportunity for these matters to be given more air-time, and to focus the legislative and regulatory requirements more appropriately.
On 2 April 2015 at 11:01 am Alison Renfrew said:
It is very difficult for an experienced adviser like Graeme Lindsay to find suitable courses for which he could earn CPD's. They are out there but too basic for him. He could do these courses but he wouldn't be learning. He would only be taking them to 'play the game' which is dishonest isn't it? You have to be true to yourself and attending irrelevant courses where you don't benefit at all but which cost you significantly in terms of time and money only to gain a required level of CPD credits is not being honest.

The insurance industry is constantly changing and there is always more product knowledge to dissect but this is product provider information and doesn't count as structured CPD credits. The same applies to AFA's. It's easy when you are young - there's so much to know - but after several decades in the industry it's pretty hard to source appropriate courses. I support your comments Graeme.
On 2 April 2015 at 3:57 pm dcwhyte said:
Well said, Alison. My sentiments exactly.
On 2 April 2015 at 9:15 pm w k said:
I thought I can make a contribution back to the industry I had been in after more than 30yrs of practice in life, general, mortgage broking & financial planning. I also hold professional & tertiary qualifications.

So I thought FMA would be a good place to start. Applied for two jobs, didn't even a phone call or interview, only an email to say that I've not been selected.

Wow, are my experience and qualifications so worthless that I don't even deserve an interview. I am NOT even saying I should be given the job.
On 7 April 2015 at 1:36 pm Tash said:
Alison: you say product provider information cannot be structured CPD - says who? I've been in the industry for almost 10 years and one thing I have discovered is how poor most advisers knowledge is of life, disability and medical contracts. There are significant and important differences between providers products and as you say many are changing and evolving all the time. It is absolutely wrong to think "experienced" life advisers cannot learn new facts or find relevant CPD - in fact it is this "I've been around a long time and no one can teach me anything new" attitude that condemns such people to increasing ignorance and increasingly incompetent advice.

David: Did you attend Partners Life's recent roadshow? Yes there was a product launch but there was also lots of valuable "professional learning" thrown in about how products work and for whom they work best.
On 8 April 2015 at 8:09 pm dcwhyte said:
Nobody is suggesting that Risk Advisers should not be subject to a CPD regime - least of all Alison. Product providers, including Partners (I'm big fan of innovative life insurance companies that challenge the status quo) stage product launches with the express purpose of stimulating product sales. Providing technical information is likewise delivered in the hope and expectation that the attendees will select their products to provide client solutions. Nothing inherently wrong with that, but like Brent Sheather said, it's not CPD.

Also. nobody suggested that experienced advisers know everything there is to know based on experience.

You may recall that this topic started when Graeme Lindsay questioned the availability, utility, and relevance of Risk CPD to someone of his ilk.

The man has been running his own product analysis platform for more years than he'd admit to, so in this case - the currency of product knowledge is not in question.
You say you have discovered 'how poor most advisers' knowledge is of life, disability, and medical contracts'- I suggest you submit evidence to the FMA of your 'discoveries' and have these advisers removed from the industry.

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