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CPD detail may be for associations to tackle

The number of hours advisers are required to spend on continuing professional development under the new regime may be a question for professional bodies, the code working group has said.

Thursday, October 25th 2018, 6:00AM 19 Comments

The group held a webinar on Wednesday in which it answered questions about its draft version of the code.

One of the themes advisers sought feedback on was the issue of continuing professional development.

Under the code, which will apply to all financial advisers in the new regime, they will be required to complete learning activities designed to ensure they maintain the competence, knowledge and skill to provide the financial advice they give and an up-to-date understanding of the regulatory framework for financial advice in New Zealand.

That compares to a more explicit requirement in the existing code for AFAs, for no fewer than 30 hours structured CPD over two years.

The code committee said it wanted to emphasise the importance of doing CPD properly rather than a number of hours. “CPD is not about serving time but what did you learn.”

Advisers said it would be harder to prove that standard than to tick off the hours requirement. The group said it would listen to that feedback but it wanted to emphasise the principles of CPD rather than the process.

Member John Berry said it could be possible for professional bodies to set a higher bar for CPD and enforce that for members. “We are not setting best practice but a minimum standard.”

He said it was hard for the code to have any prescriptive function with as many as 30,000 advisers set to come under its remit.

Chair Angus Dale-Jones said the working group had pulled right back from any process requirements. Anything that tried to give advisers details of how to operate their businesses had been removed.

He said he was sympathetic to feedback from advisers who had been working a long time and did not want to go back to doing exams.

The draft code sets the level five qualification as the standard for the advice profession.

In those cases, it was possible for people to opt to pursue recognition of prior learning, in which they could provide evidence of their experience and learning to be assessed. But the group warned that previous experience had shown that some people found it more expensive and time-consuming to do that than to simply complete the certificate.

Dale-Jones said an important question for people to consider while they consulted on the draft was whether the code created an advice profession that the industry was happy with.

Tags: Code Working Group Dale-Jones financial advisers John Berry

« FSLAB expected to pass by early 2019Mann on a mission to diversify financial advice »

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Comments from our readers

On 25 October 2018 at 7:43 am Pragmatic said:
If industry advisers want to be accepted as professionals then surely a useful starting point is to adopt many of the practices of other professional bodies. This includes setting a minimum hurdle rate to enter the industry – measured through specific academic and industry experience hurdles – together with a prescriptive number of relevant annual continuing education hours.

I can see the proposed CWG suggestion opening the door for abuse and (worst still) "aging-industry-know-it-alls" who believe that there is very little benefit in continuing education for them (or that they obtain all of their required knowledge from reading the paper).

Industry participants are genuinely looking for guidance here - which includes providing a defined annual CPD criteria.
On 25 October 2018 at 8:24 am JPHale said:
Pragmatic, I understand your points; however, the approach with no defied CPD hours is to remove the opportunity for tick box compliance that hours of CPD brings. For the grumpy guys with tenure, and I'll be one of those too, it forces us to prove that continued competency rather than bluster about being competent when we may not be.

This whole process has forced me to review my own approach, and that's got me doing training and certification. Did I want to do it, no, has it hurt me, no, has it helped my approach and quality of advice, probably.

And that's the point, this is about consumer driver outcomes not adviser comfort.

As we’ve known for a long time its easy to sell a product, its much harder to advise a client with understanding to make an informed decision. This is the massive change in mindset this review is driving.

And client understanding is a key point in the new code.
On 25 October 2018 at 9:44 am Pragmatic said:
Thanks JPHale - great perspective. The only addition to your comments is that none of which you or I have suggested is mutually exclusive. Advisers can have a prescribed CPD program that meets their / the industry’s learning requirements (...or “adds value” in layman’s terms)
On 25 October 2018 at 9:54 am Tash said:
Excellent work CWG and congrats to Angus Dale-Jones for recognising that CPD is not just ticking off hours spent sleeping though training.

In the life insurance space it takes the likes of Russell Hutchinson, Steve Wright, Trecia Brown, just a few who come to mind, 5 minutes of speaking with an adviser to establish their level of competence.

Advisers will quickly be found to be non-compliant if they do not do the necessary CPD. I for one will be carefully recording the CPD I do and making sure I get real knowledge and expertise out of it.

I go to lots of seminars and training sessions and usually see the same faces there - where are all the others? I do not want to be on the back foot if a complaint is ever laid against me.
On 25 October 2018 at 11:52 am Comprehensive Planner said:
The various comments on CPD above are accepted and in particular for those of us that have gone well beyond a level 5 NZ Certificate and hold the likes of CFPcm and/or CLUcm, not having a set number of CPD hours as a requirement is beneficial as for the last ten years we have needed to do CPD that adds very little to our knowledge simply to meet the code requirements. Certainly there are opportunities to develop into other areas of advice and this will create a need and obligation for additional CPD.
But let's not loose sight of the fact that holding a NZ Certificate at level 5 will not create a Profession, this is where Pragmatic's comment in spot on.
On 25 October 2018 at 10:25 pm JPHale said:
Comprehensive Planner, and that's spot on.

The point is the code sets the minimum bar to play and it needs to apply to all participants across the industry. Higher levels of education will still need a level of 'maintenance' to remain current.

As you say there's potentially little to be gained from CPD if you are qualified at a much higher level; however, there's still a need to remain current in the changes in requirements at the level 5 level, as this is more reflective of the regulatory environment requirements we will all have to meet.

For Level 5 holders it is likely to need more effort and activity than the CFP/CLU qualified advisers but won't take away the need for the CFP/CLU advisers to also remain current with any changes.

As to profession and professionalism, agree, level 5 doesn't give us that, however, CFP/CLU doesn't necessarily deliver that either.

Education, good conduct, good regulation, and good business models that deliver good outcomes for clients is where we start.

Yes, CFP/CLU advisers typically fit this bill, as they typically are the types of people to focus on these things and look to do better and be better.

At the same time, it shouldn't take away from the lower qualified adviser who's very good in their niche of expertise operating a good practice and meeting the needs of their clients in a professional way.

We can't have everyone at the top, it's crowded, but also doesn't account for the differing desires and motivations of the various advisers to do what they do.

Some do not aspire to be the best in the industry, however, that doesn't take away from their desire to do a good job and potentially focus on lifestyle, family and living.

Something we protect, but we often lose sight of in the quagmire that is the world today.
On 26 October 2018 at 6:47 am Murray Weatherston said:
Open questions to CWG about CKS

I listened to the podcast Wednesday. I get that the CWG has come up with the cute distinction between holding a qualification and having met the learning outcomes of the specification of that qualification as the standard. That leads potentially on an infinite number of ways to say you have met the standard.
Remember that there will possibly be 10,000 financial advisers (using the term as in FSLAB) outside of the big institutions who will need to meet the individual standard, and there are currently fewer than 2000 AFAs and my guess fewer who aren't AFA but do have Level 5 awarded by NZQA.
[I'm not worried about how the VIOs handle this issue - I have no doubt they will continue to manage the regulators. I am worried about the non-VIO sector where our members live.]

Two basic but very practical questions arise for me from the CWG draft standard.

1. How can a person (other than by fiat) who has NZ Cert Level 5 by way of Core and Investment or Core and Life and Health or Core and General insurance or Core and Residential Property Lending be said to have met the learning outcomes of Core and Financial Advice? Apples and oranges anyone?

2. RPL (recognition of prior learning)
Can anyone tell me (if I am not an AFA or have NZ Cert level 5)
(a) Who is qualified to determine whether my portfolio of learning experiences is equivalent to the required learning outcomes
(b) who actually sanctioned them as being so qualified - I'm looking for 3rd party sanction, not simply self-assertion
(c) Corollary - If I am an entity of 4 RFAs (ie not AFA) none of whom has Level 5, and each of whom has a different set of learning experiences, how much will it cost to get the confirmation that everyone's portfolio meets the learning requirements
(d) does this consulting discipline have capacity to do 5,000 such assessments?
{I did hear Barbara's statement that it may be cheaper and faster to do the actual qualification than go down this PL track).

PS responders, please note carefully the limited nature and scope of these questions.
On 26 October 2018 at 8:27 am Murray Weatherston said:
Addendum - Breaking News

Two part quiz
Is anyone prepared to guess
(1) how many NZ Certificates in Financial Services (Level 5 ) [Qual 2315] have been awarded; and
(2) of them, how many included the Financial Advice Strand.

A chocolate fish for the closest answers by cob today (so long as within 20% of the actuals on both parts). Bureaucrats and Regulators are not prevented from entering - actually they are actively encouraged to enter.
On 26 October 2018 at 9:43 am Robert Oddy said:
Hi Murray, I'll play your silly game - providing the chocolate fish has not been pre-licked!

My estimates are 500 over the almost 4 years since early 2015 and around 50 with the financial advice strand.
On 26 October 2018 at 9:49 am dcwhyte said:
Good questions, Murray. Wouldn't it be simpler to say Level 5 is the minimum requirement for everyone? This an the business replacement segment seem to be open to misintepretation - deliberate or otherwise.
On 26 October 2018 at 10:23 am JPHale said:
There's a little circumspect to be applied to this.

The CWG is meaning the specific product advice strand qualification not The Level 5 Financial Advice Strand.

John Berry has confirmed there's been either a typo or an oversight on the wording to encompass all strands and has inadvertently defined one.

The intent is if you do Investments and financial planning it is the Level 5 Financial Advice strand and/or the Investments strand, if it is Life & Health then it is the Level 5 Life and Health Strand, etc.

It should read something like NZ Certificate in Financial Services with the appropriate financial advice product strand for the advice given.
On 26 October 2018 at 10:27 am JPHale said:
David, the wording on the replacement is deliberate as there's nothing in FSLAB about replacement, thus the comments that a request or implied expectation of a product comparison triggers the need for a comparison to be done.

In a professional client-centric business this should be a given and a no-brainer. It still remains a problem from the FMA's perspective, more so from the current QFE perspective than the RFA one. Though the RFA one needs improving too.
On 26 October 2018 at 1:43 pm Barry Read said:

Work place assessment is a valid way of assessing competence against set unit standards and performance criteria.

The purpose of completing course work to achieve competency is generally based on the fact that the student needs to learn the course work to be able complete assessments or tests to demonstrate that.

The course work is generally theoretical and not based on actual work completed in the work place, (Though the Financial Advice unit standard does allow this).

The question then becomes if an adviser already has the competence, or thinks they do, is there any benefit in completing the course work and theoretical work required? Or would it be better if their actual advice work is assessed against the unit standards and performance criteria related to the areas they give advice? Also by checking there actual work it would assist FAPs or the regulator in knowing that their real work is in line with requirements, compared with passing a certificate and then going back to the office and not implementing it.

I would like to see assessment of adviser who have say more than 7-5 years experience delivering advice and can demonstrate they have completed suitable Professional Development during that time (There are a lot of RFAs who could do this). If the assessment process can't evidence competence in certain areas, then back to school!

Just my thoughts.
On 26 October 2018 at 3:25 pm swesty said:
As a new RFA Adviser, I have completed Level 5 for Mortgages, and within the month will have completed Level 5 for Insurance.

Based on the new code requirements,I will have achieved Level 5 for both and therefore meet the minimum standards.

But not Financial Planning as yet, and I might choose to do this going forward for my own interest but at this stage I am happy with specializing in my 2 areas

I have over 30 years plus in Finance, so while it was a bit of a challenge to come to grips with the study, it wasnt onerous so should be achieveable for most advisers who currently dont meet minimum standards.

I find any kind of CPD crucial to keep up to date, and offer the best service to my clients.

My feeling is that it wouldn't do any existing "unqualified" adviser any harm to just get the Level 5 done. I agree with J-P .."And that's the point, this is about consumer driver outcomes not adviser comfort."
On 26 October 2018 at 3:28 pm Murray Weatherston said:
Hi Barry
My question wasn't about "How?"

My questions were about "who?" and "who authorises the "who"?"
On 26 October 2018 at 3:41 pm Murray Weatherston said:
Hi J-P
Have you been appointed official spokesman and interpreter for CWG? Congratulations.

Your 10.23am does not make any sense to me. And if there really is a typo or oversight, wouldn't you think CWG should issue a formal correction before we all finalise our submissions on the text published?

And your response to David completely misses the point. A number of commentators have previously said the example is skew-wiff, and Angus as much admitted that on the podcast.

The fundamental point everyone else had landed on is this - the draft says "Beth recommends that a client replace an existing policy that provides similar benefits to the existing one." The obvious question is "then why is Beth recommending a switch/"

The text then goes on to say the nature and scope ..."excludes a comparison". But the text then goes on to compare the policies Duh!
On 26 October 2018 at 8:43 pm JPHale said:
Funny Murray, funny. Though I haven't been pulled up, gagged or otherwise corrected, so I guess I can't be too far off the mark.

Though as you know I'm limited in what I can say from the CWG meetings; you opted out, which is fine that's your call, but no, I'm not the spokesperson for the CWG.

However, I was at a meeting with the Minister which included Angus, Beckie, from the CWG and David from the adviser panel and other advisers last Friday, and we discussed many of these points in detail and this wasn't requested with a cone of silence.

Of which Angus has conceded with several public comments there and elsewhere that the intention of the code and the wording of the code needs a little tweaking to bring the language of the code in line with the intent of the code.

What was made clear to me and the others around the table last Friday was the intention is to have everyone meet the minimum bar of Level 5 to be able to enter the playing field. And that meant level 5 in the advisers specialist discipline.

It's unfortunate that the wording of the code has coincided with the financial advice strand of the education specialty. But that's not the intention expressed by the CWG.

What seems to be happening is everyone is getting distracted by the words, rather than looking at the intent of the code. Especially when its' been said that things need a language tidy up.

As to the formal correction, why? Everyone is going to have an oar in with their submissions. Who knows, it may have been the CWG's play to have that typo in there to ensure they knew if they were getting a reaction, or if anyone was reading it and understanding what it says. As I'm not the CWG spokesperson, maybe you can ask the team next time you see them on that approach?

As to the example for the replacement in the code, yes, that's a mess, that was a conceded point on Friday before we even got started. I've not commented directly about it as I knew it wasn't going to stand the way it is. It's daft.

Though, sorry, I don't get your point about my comment in reply to David. You'll have to explain that to me?
On 28 October 2018 at 2:56 pm dcwhyte said:
J-P, Murray - re replacement - I think we're all about to land at the same conclusion. Whether FSLAB mentions replacement specifically isn't relevant.

The Draft Code does and we all agree it needs drastic 'surgery' as it's intended that consumers are made aware of the issues around replacement - hence the proposal to include an example.

It's the wording in the example that needs attention.

Advisers should also be aware that the recent FMA review of selected Advisers' client files following the so-called "Churn" Report specified that documentary evidence of a comparison of the existing and replacement product is required.

Leaving this as an unspecified process may meet CWG maxim of avoiding mandating how Adviser businesses are to be run, but, for my money, this is too important an issue to be left exposed to a potential "he said/she said" dispute in the future.

I don't believe the current example and its attendant wording is either enough to satisfy either a "Principles-based Code_ or a minimum standard of conduct.

Consumers will be poorly served by taking a lax approach in this public-facing document to the replacement issue.
On 29 October 2018 at 12:32 pm JPHale said:
Agree David. The example has been well noted as needing significant surgery.

I'm waiting on what this might look like.

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