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Financial advice career pulling a younger crowd

The latest crop of would-be financial advisers is slightly younger than two years ago.

Monday, May 29th 2023, 6:20AM 6 Comments

by Andrea Malcolm

David Greenslade, director of training provider Strategi says at the end of April more than 100 people who are mostly new to the industry enrolled to do the New Zealand Certificate in Financial Services (Level 5) version two - NZCFS5(v2).

“This is indicating there is a significant number of people out there who are considering financial advice as a career.”

He says the average age of the newcomers is slightly younger than in the previous two years–dropping from 42 to 36.

“The age coming down is a good sign for the industry and really positive.”

Strategi is adapting how it provides training to suit the newcomers.

“The way you support newbies is slightly different to those who have been in the industry for years. They are less likely to want classroom-based courses and are used to self-paced study and using video. We’re providing tutorials that will run in the evening because they are in jobs and boosting the level of support material because they need a bit more in depth information to understand the context behind things.”

Major assignments will continue but more ongoing self assessment will be built into courses. “They are used to the type of education delivery that you’d expect at university,” says Greenslade.”

This new group contrasts with the cohort which enrolled between 1 September last year and March when the new regulatory requirements for the NZCFS L5 came into force. Greenslade estimates that at least 70% of that group was practising advisers who needed the qualification to continue providing regulated financial advice.

He says the course usually takes six months and he had expected people in that group to complete the course to a high standard in order to keep practising.

However 409 (37%) have still not submitted at all and the quality of assignments that have come in has significantly deteriorated with a vast number having to resubmit three times to pass.

“It’s clearly evident that some people who had been operating for some years regarded Level 5 as a tick box exercise rather than understanding the required standard to which they have to deliver advice.

“When it comes to assignments, in many cases they hadn’t read the question properly so only answered half, hadn’t read the material and put down what they thought, based on past experience, or not looked at all the assets in the case studies.”

Strategi has followed up with the non-starters with people saying they have put studying on hold, their role in their organisation has changed meaning they no longer need the qualification, their business has moved to wholesale as opposed to retail, or they now offer information-only services as opposed to financial advice. Some have decided not to be financial advisers.”

Greenslade says those who have stopped were possibly older advisers who had delayed retirement until the end of the two-year transition period.

His concern is whether those who still haven’t qualified are giving advice in the marketplace. “There just doesn’t appear to be a whole heap of urgency from people to submit assignments which is surprising because if you were practising before and you can no longer practise without level 5, you think you would be submitting.”

He says most are “at the smaller end of town”,  single operators two to three people in a firm.

Greenslade says it will take another 12 months to get an accurate feel for how many financial advisers may have left the industry because people still have another three months to go before they have to renew.

“I would say they will wait until their annual registration comes up for renewal. Also nominated representatives don’t go on the [financial services provider] register.

“Once the annual regulatory return regime kicks in from the middle of next year, that information will be available through the Financial Markets Authority.”

Greenslade says unlike Australia where raising the regulatory and educational bar resulted in a massive loss in financial advisers, he does not see that happening in New Zealand.

“There has been massive fear mongering, without statistics, that the regulatory change will cause a loss. We’re right at the leading edge and we aren’t seeing it. Moving forward the industry is in good heart. I think the regulatory balance is about right in New Zealand.”

In a typical year Strategi has had more than 1000 registrations and very high completion rates with most people only having one or a maximum of two resubmits on assignments, he says.

Tags: Strategi

« FMA files criminal charges over alleged fake FAP licenceTough times ahead for NZ economy: Nikko economist »

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Comments from our readers

On 31 May 2023 at 8:28 pm John Milner said:
I attended an FSC event recently and thought I must have made a wrong turn and ended up at a pre-school ball event. In retrospect, it was an unexpected and welcomed surprise. We desperately need some young blood in our industry.
On 2 June 2023 at 8:35 am valkyrie6 said:
Yes, David there has been fear mongering all right from training organisations. Unnecessary courses not required to hold a FAP license been recommended to advisers just in case “the FMA comes knocking “with costs involved from $ 20,000 to $ 100,000. Frankly, the whole thing has been one great revenue gathering exercise. Naturally, you think the regulatory balance is about right because your organisation has done very well from it.

Plus, we don’t know what behind the door deals some training organisations have done with dealer groups in sharing revenue generated from the adviser.

Insurance advisers I talk to say there will be a significant shortfall now in the number of advisers available to service clients. If a whole lot of experience has indeed just walked out the door or retired early, then that’s a disaster for the industry and the consumer also.

Regulation is supposed to benefit the consumer not disadvantage them.
On 6 June 2023 at 1:36 pm John Milner said:
Interesting view @valkyrie6. If advisers have struggled to get over the line with a level 5 qualification, god help our industry. This is an entry level qualification, not brain surgery.

But perhaps selling as opposed to advising doesn't require any form of training?
On 7 June 2023 at 9:27 am Amused said:
@ John Milner - David Greenslade is saying that the regulatory change associated with licensing hasn't caused a loss of experienced advisers to exit the industry. That is just plain wrong.

Training organisations and regulators have done very well from licensing but what about the New Zealander consumer? They continue to need access to independent financial advice. The banks are too scared now to give their own customers advice, so advisers are all that’s left, and we have just seen a whole lot of experienced ones walk out the front door! All the evidence we have seen across the Tasman says that we will only end up repeating the same mistakes they have made there. A recent review of the regulatory changes made to the Australian financial services industry showed that Aussie consumers were been negatively impacted.

Statements like that above saying that it's been advisers who have been fearmongering and not the other way around really annoy me. Level 5 was the entry level qualification yes to keep providing advice but as valkyrie says correctly advisers were certainly encouraged to do additional courses at great financial cost which weren't even necessary for them to be licensed.
On 7 June 2023 at 1:02 pm JPHale said:
Pleased to hear about the younger heads coming in, the question arises, is that for risk or the other stuff that's easier?

Risk requires a level of life experience, and the market for buying insurance is typically over age 35. So related age clients for young advisers can be a struggle.

As John Milner said, level 5 is the minimum bar, it should not be difficult for advisers to pass this. And if it is, maybe financial advice is not the best career choice.

Sales skills are still needed in addition to technical skills, as clients for risk still need to be found and “sold” to. People have never got out of bed and gone I’ll buy life insurance today, and that's not changing.

And for those that do go I’ll buy cover today, unprompted, usually can't be helped because of their medical issues driving that thought.

Cynical much? Probably. End of the day people fundamentally don't want to pay for something they see no value in, and it's up to advisers to demonstrate that value... Aka sales
On 8 June 2023 at 2:49 pm Aggressively_passive said:
in unrelated news: It has been discovered that retiring advisers have a higher average age.

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