Financial Advice NZ ponders questions of experience in Trusted Adviser consultation

The plans for the mark, which have been part of the association’s plans from the outset, were unveiled in June.

A Trusted Adviser of Financial Advice NZ is a member who has been accepted as having a level five qualification or higher, three years’ experience providing regulated financial advice, a minimum of 20 hours’ CPD a year, completing a three-hour ethics workshop every three years, and holding appropriate adviser-level professional indemnity insurance.

Board chair Sue Brown told a webinar discussion about the mark that it could not be finalised until the new regulatory regime was clear. That will take effect from next March.

She said what the board had settled on would be meaningful for advisers and consumers but was also achievable for all Financial Advice NZ members.

Chief executive Katrina Shanks said the requirements for the mark were higher than for the industry as a whole. The new code of conduct only requires advisers to demonstrate outcomes equal to someone who has completed the level five qualification in financial services.

But she said the feedback so far had questioned whether experience should also be recognised.

Whether a member who did not have a qualification but who had a significant number of years of experience should be deemed to have met the qualification standard was an area to consult on, she said.

There were also questions about whether founding members of Financial Advice NZ should be able to be grandfathered in if they had experience.

She said a survey showed 93% of respondents supported the idea of the mark and 71% thought they already met the criteria.

Shanks said the association would promote the mark with a consumer campaign but it would have to remember that there would be members who did not have the mark.

“It’s important to get the balance right between people seeking financial advice from Financial Advice New Zealand and also the public understanding there’s also, on top of that, another mark as well. It doesn’t mean they’re not trusted but they’ve made a different commitment.”

She said she had no doubt that over time the requirement for the sector would be a level five qualification, because of the FAP structure of the new regime.

“That will evolve over time anyway. Do we put that in place now or wait for the evolution to happen?”

Brown said she hoped that within a few years, the mark could be entry-level criteria for the association.

Comments from our readers

On 5 August 2020 at 8:51 am JPHale said:

We do need to be cautious of the experience terminology as 25 years in the industry can have some profoundly different reality.

Is it genuinely 25 years of learning and associated experience that has developed and grown the individual or is it a rinse and repeat 25 times of the first year of sales BS.

On 5 August 2020 at 10:19 am Matron said:

@JP Hale is correct. I'm not aware that other qualmark standards use 'experience' for an annual certification of proficiency.

On 5 August 2020 at 2:49 pm Amused said:

She (Katrina Shanks) said she had no doubt that over time the requirement for the sector would be a level five qualification, because of the FAP structure of the new regime.

We really are grasping at straws aren’t we to differentiate this “Trusted Adviser mark” when we start making statements like the above saying that advisers won’t automatically be completing a level five qualification as part of licensing. So I guess the only difference then is the completion of a three-hour ethics workshop been done every three years. I’m pretty damn sure you can’t teach ethics to someone who might be ethically challenged already.

Sorry back to the drawing board Financial Advice NZ. You’ll need to find another marketing pitch to remain relevant to advisers and consumers under the new Financial Services Legislation Amendment Act.

On 6 August 2020 at 12:33 pm Murray Weatherston said:

The Code that comes into effect on March 15 2021 does not require the Level 5 Qualification.
A number of AFAs (me included) do not actually have the level 5 qualification because there were equivalent qualifications for some parts of the AFA hurdle e.g Sets A C and D.

On 6 August 2020 at 1:43 pm gavin austin adviser business compliance said:

ANZIIF (Fellow) CIP. for insurance broker advisers, CLU for Risk advisers, CFP for Investment advisers and so on. Do we really need more lables. Also it's quite an arrogant stance from FANZ to imply they can access "Trust". Come on FANZ, there are better things you can do to lift professionalism thus "perhaps" increasing public Trust in Advisers. I'm not sure at this point in time whether I'll continue my membership this year. I might give them more time to allocate members funds in a more constructive way. I very much doubt that this will attract more members.

On 6 August 2020 at 2:09 pm Tash said:

I am sorry, but the level 5 qualification does not do anything other than provide the most basic level of knowledge.
Anyone who thinks this is enough for giving advice with the necessary skill and diligence required does not understand what it takes to give even moderately acceptable advice.
I remain disapponited. When every adviser qualifies (as they surely will) this 'mark' will mean nothing to anyone.
I like the idea of someting advisers can strive for to exhibit their superior abilities, but this must be a stretch not a gimme.

On 6 August 2020 at 2:37 pm JPHale said:

@Murray the code standard 6 is quite clear on Level 5 education requirement, or it's equivalent.

The standard of general competence, knowledge, and skill is that the person has capabilities equivalent to the general qualification outcomes of the New Zealand Certificate in Financial Services (Level 5) version 2 approved by the New Zealand Qualifications Authority in January 2019 (NZQA reference 2315). The general qualification outcomes are qualification outcomes 1-4 of that certificate.

A person may demonstrate their general competence, knowledge, and skill by any of the following ways:

hold version 1 or 2 of the New Zealand Certificate in Financial Services (Level 5, hold the National Certificate in Financial Services (Financial Advice) (Level 5)

was an authorised financial adviser immediately before the commencement of the Code

give financial advice only through an individual who satisfies any of the ways stated above.

While it's not explicit in Level 5 paperwork, the education standard is equvilent.

But, like many have commented Level 5 is a bare minimum and does not convey anything.

The CWG have basically said a CLU still needs to do level 5 for the regulation compliance rather than the advice bit. I’d read that as doing core and using the CLU for the rest, but that’s my opinion.

Frankly, my view is the education requirement should be CLU or CFP not level 5. And I have neither so no vested interest in saying this.

This would give those that don't have it an incentive for the higher learning and would also address some of the trust issues raised in the comments.

I'd also suggest setting the bar on experience at 5 years as 3 still has trainer wheels.

On 6 August 2020 at 4:46 pm Paul Flood said:

Surely trust is something that an adviser earns from a client on the basis of initial and ongoing quality advice and good service? The thought that it can issued as a title or a mark strikes me as odd, in the same way that labeling North Korea "The Democratic Republic of North Korea" is odd.

On 7 August 2020 at 8:13 am Barry Read said:

I agree Tash. There is a difference between theory and reality. Personally I think some form of review of the advice is required to ensure the advice service is suitable and meets the associations standards. (This could double as a check for the advisers FAP to rely on too to save on audit costs). Quals and Exp are good, but what is actually happening day to day is more important if you are going to state the advice service can be trusted by the public.

Financial Advice NZ ponders questions of experience in Trusted Adviser consultation

How the Financial Advice New Zealand Trusted Adviser mark will recognise adviser experience is a question being ironed out through the association’s consultation on the mark.

Wednesday, August 5th 2020, 6:00AM 10 Comments

Comments from our readers

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