Veteran adviser says Level 5 standard isn’t good enough
The new Financial Advice Code comes into effect on 1 November 2025, but veteran adviser and Certified Financial Planner Nigel Tate says its updates don’t go nearly far enough.
Wednesday, September 17th 2025, 3:30AM 
12 Comments
by Ksenia Stepanova
He says the current minimum qualification leaves too much room for poor advice and puts consumers at risk.
The revised Code keeps Level 5 as the baseline for all advisers. It also tweaks the rules around continuing professional development (CPD), asking advisers to plan and record learning that’s relevant to their practice. Tate says the issue is that it’s largely self-determined, and a casual chat about a sale could be recorded as CPD under these guidelines.
He also says we need Level 7 as a standard outside of areas like basic car insurance.
“I don’t believe that Level 5 is high enough on any of the elements, but particularly when you start to integrate a group - retirement, risk and investment management, for example,” Tate tells Good Returns.
“That’s when you’re getting into financial planning, and the implications of that are far greater than if you’re just getting someone’s mortgage rate wrong.”
Tate proposed higher qualification standards at a consultation with FANZ, but got the impression that its proposals were already decided. Other advisers advocated for higher standards to the Code Committee, but it was ‘unconvinced’ that a higher bar would result in better outcomes.
Tate also notes that areas like insurance or KiwiSaver advice are treated as ‘not complex’ for the purposes of regulation - however, the cost of making mistakes is huge. Something as simple as a default KiwiSaver fund at an early age could mean hundreds of thousands of dollars missed out on come retirement.
Notably, insurance disputes through IFSO were at a record high this year.
“I would much rather have the fence at the top of the mountain than have an ambulance at the bottom,” Tate said.
“We need to move progressively to Level 7 and give practitioners plenty of time to get there. For nominated representatives in one area, the baseline should be Level 5, and they should stick within their lane. But anybody that wants to give financial advice should be going through to Level 7 in the next five years.”
The pitfalls of self-determined CPD
The revised Code’s approach to CPD is non-prescriptive and doesn’t set any hard minimums. It also recognises ‘informal’ learning including reading or self-directed study.
Tate says this lack of a concrete definition is essentially “the equivalent of getting credits for picking up rubbish at school.” He also noted that New Zealand has the lowest bar for advisers in the OECD, with Australia, most of Asia and the US requiring a bachelor’s degree.
“You make up your own CPD, you decide whether or not it’s actually CPD based on what you want it to achieve for you,” he says.
“I know they’re trying to be as non-prescriptive as possible, but we’re human beings. Most of us will follow rules if we’re told what they are. And if the regulator is going to be prescriptive at complaint time, let’s be prescriptive beforehand.”
Tate says that regulators should be going to professional bodies and getting specialist input when deciding standards. This could mean sitting down with Certified Financial Planners or chartered life underwriters.
“At the end of the day, turkeys don’t vote for Christmas,” he said. “If you ask the people who are most adversely affected by the raising of education standards, you’ll likely get a negative response. Those who aren’t adversely affected have gotten ahead of the game.”
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Comments from our readers
On 17 September 2025 at 12:26 pm JPHale said:
Agree on the minimum quals, people don’t understand this stuff as well as they think or need to.
Level 5 only tests ability to understand the question and find/recall the answers. Level 7 requires articulation of understanding, a quite different level of knowledge and comprehension required.
I have for years said the prescription for reducing/removing insurance is a good wealth accumulation plan. The plan aspect needs more work as it’s not happening alongside the other disciplines as well as it needs to be.
I was surprised the requirements around investment advice n the code wasn’t increased to Level 7 this time, as it was a discussed intention with the FSLAA Code of Conduct back when it was set.
With the specific carve out for investment planning done to enable this to be changed fairly easily in a future review.
On 17 September 2025 at 2:17 pm John Milner said:
Sadly a large proportion of the industry want to be treated as professionals but would sooner remove an eye than invest in themselves in education. As long as they can get through the entry level minimum, it’s enough it would seem to provide full financial planning services, as illustrated on many advisers websites. It’s the blind leading the blind and perpetuated by the code. On 17 September 2025 at 5:54 pm Paul Flood said:
“At the end of the day, turkeys don’t vote for Christmas. If you ask the people who are most affected by the raising of education standards, you’ll likely get a negative response.”
The 2024 regulatory return data shows there were 8,472 advisers on 30th June 2024. FANZ reported there were 223 advisers holding the CFP designation as at 3rd April this year, and I’m guessing there are around 50 or so CLU holders. That leaves roughly 8,000 turkeys with either Level 5 or providing advice as nominated representatives.
These aren’t the folks who will be most affected by raising education standards. Overseas experience conclusively establishes that raising minimum education standards leads to a significant reduction in the availability of advice. Fewer turkeys come Christmas time means more people missing out on Christmas dinner, at a time when there is already a turkey shortage.
You note that “insurance disputes through IFSO were at a record high this year”, which could be prevented by raising the minimum education standard to function as a fence at the top of the cliff. Looking at the 2023 and 2024 IFSO annual reports, I’m not seeing the problem.
The reports do evidence a year-on-year increase in complaints accepted in the “Fire and General” and “Health, Life, and Disability” sectors (283 to 428), but as best I can tell these are complaints against insurers, not advisers.
IFSO accepted 327 complaints for consideration in 2023, and 479 in 2024. Of those, 11 related to financial advisers in 2023, and 9 in 2024. (Type of advice provided is not recorded.) In both years, the overall percentage of closed complaints that were either not upheld or withdrawn was 78% (no breakdown by sector).
Let’s speculate that 25% of complaints about advisers were either upheld in full, in part, or settled between the parties. That looks like low single digits in both years to this (ex-)turkey.
So that’s one vote for the status quo from me for now (Level 5, with a concession that a higher standard might be appropriate where a comprehensive financial planning service including investment advice is offered). Knowledge and skill gaps to be filled through CPD, as already provided for (and required by) the revised Code, with ultimate responsibility at the FAP level (Code Standard 9, FMCA 431Q).
On 18 September 2025 at 6:37 am Paul Flood said:
I found another 11,423 turkeys. The figure of 8,472 advisers didn't include NRs, as I mistakenly claimed in my earlier comment. On 18 September 2025 at 7:50 am Amused said:
@ Paul Flood - well said. Any higher educational requirements for advisers in New Zealand need to be based on evidence that such requirements will result in better outcomes for consumers, otherwise the only people who actually win are the education companies. At present the code committee clearly does not see any benefit to Kiwi consumers in the industry needing to raise the bar higher. As an industry we should all be feeling pretty good that the code committee believes advisers in New Zealand are doing right by their clients. As you have correctly stated this fact is evidenced by the distinct lack of complaints being made against advisers annually as per the published dispute resolution scheme stats.
Like yourself I also concede that when advisers start to advise on a range of areas they should be required to be held to a higher threshold, as this starts to delve into the area of Financial Planning rather than simply financial advice. So perhaps if deemed appropriate by the code committee later raise the required standard to level 7 but retain level 5 for individual elements of financial advice i.e. insurance and mortgages.
Depending on whether you are an insurance adviser, a mortgage adviser, or an investment adviser your own CPD will differ greatly for your chosen area of expertise. As per the current code requirements self-determined CPD is perfectly acceptable provided that you can demonstrate ongoing learning. It seems the people making a big song and dance about acceptable CPD now are the businesses and individuals who make money from it.
On 18 September 2025 at 10:18 am Lany Liang said:
@Paul
Holding a CFP or CLU designation is not the same as holding a Level 7 qualification. I belive there are already a number of advisers who have completed Level 7 studies in finance or related fields, even though they haven't pursued those designations. It's also worth noting that the distinction between Level 5 and Level 7 study is significant.
I also agree there are some very good, experienced advisers who may not hold higher-level qualifications. There should be a way to recognise and keep their valuable contribution. At the same time, raising the overall professional standard is a bit like setting expectations for our children: without higher expectations, they don't know the direction to strive towards or how to improve.
On 18 September 2025 at 12:32 pm Eyeinthesky said:
I'm always bemused by this debate.
Let’s say I was a CFP and or a CLU, and got that/those qualifications 30 years ago – or less. How relevant are they now?
How many papers did I do then, compared to how many I have to do today? If I got them back then, could I be resting on my laurels?
Sure, I have a requirement to keep up to date, CPD etc, but I’m over the hurdle of Level 5, through cross qualification, and have the esteemed letters after my name.
Does a 22 year old, coming into the profession today (note I use the term profession, rather than ‘industry’) with a CFP qualification, have the life and business experience, of someone who has been working in the profession for 20+years.
Is life and business experience relevant, or should we all be robots. Has that younger adviser lived through massive, down economies and markets, and bring that knowledge and experience to the table.
We all have a responsibility to ensure we are giving advice within the scope of our qualifications, licensing and experience. In addition to other study, I have also done the Level 5, and version 2 and now there is a version 3 to attend to.
There has been a huge swathe cut through the numbers in the experienced adviser community as a result of more layers of legislation and regulation over more recent years. The loss of that experience has been very noticeable.
Here’s my take – if you want to be a professional, on the same standing as other technical professions, a degree is the minimum. That will sort out the profession very quickly, as most leave, or struggle to continue to provide services while upskilling. No cross crediting – a fresh degree.
I agree with Ron Flood, on all points, and he is quite right, complaints about advisors are very low.
As an aside, none of it matters anyway, as A.I. will have likely replaced us all in the next 5-10 years anyway.
If you think otherwise, you need to upskill on the velocity and direction of A.I.
On 19 September 2025 at 8:16 am Backstage said:
@Eyeinthesky, bang on. The robots are coming and it will not matter how many medals you can hang out.
How is it advisers often hate paying for education and speak with resentment about institutions that provide this?
Level 5 is very basic and is sort of like saying, "Look mum, I can colour in without going over the lines".
Being professional is an attitude, and continuing education comes with that.
On 19 September 2025 at 8:49 am Very Frustrated Adviser said:
Was great to see we got rid of "cowboys" only to be replaced with "turkey's" fantastic!
Seriously.I have always said that Level 5, 7 and CFP/CLU does not make you a better adviser, does not help you to determine what you course of action you should recommend, what Provider or share is best - that is more down to research, due diligence and time on the ground.
The best tools I have found are knowledge, networking with others be it product providers, advisers etc.
One thing you find very quickly is we have all done L5 or equivalent and no two answers are the same because our opinion and knowledge and feel for the client comes to front!
I have almost finished my CLU/CFP but stopped a few years ago because it wasn't making me more knowledgeable about a client and their needs, it was making me more knowledgeable about the back room office stuff puts, calls, options etc etc etc.
So if that makes me a turkey then so be it but I would rather always hold my head up high and know that I do the best I can for clients to my ability, knowledge and understanding of a client and there needs.
Gobble Gobble let's hope as an industry we stop putting our industry and members down by those sorts of references!!!!
On 19 September 2025 at 4:07 pm Jeff Tobin said:
I can't see how regurgitating info out of text books to give the answers an examiner wants, makes anyone a better adviser or more professional.
Passing a few two or three hour exams is not the pinnacle of intelligence or professionalism in my experience.
How much of the courses that we have done do we remember that well? You would be lucky to remember half after the course 6 months later, let alone 6 years, or 36 years later.
That’s why any of us with a first Aiders Certificate need to go back and re-do refresher courses to maintain our knowledge and the certificate , every couple of years.
Same with us advisers, we need to do the webinars and courses relevant to us for on going education and help keep us in the game. Even read and re-read the policy wordings we recommend, that’s an important one don’t you think?
Our education never stops, as I'm sure it doesn’t for anyone reading this.
By all means, study and obtain for yourself an industry qualification to a higher level than level 5, reach for the stars, it's very satisfying obtaining a recognised industry qualification and great for our egos, but that’s it really
If you are going to sustain a long and successful career in the financial advice industry, you need to keep educating yourself along with life's experiences that come our way, it's ongoing, it never ends until you retire or die, whichever happens first.
We don’t need to be doing more exams until we retire or die. If you want to, and some people are education junkies and love it, go ahead and have fun. But don’t force additional unnecessary formal education on the rest of us for the sake of it.
BTW, how many crooked degree qualified persons have we read about over the years that end up in court or prison?
Jeff Tobin CLU, ANZIIF (Snr Assoc) C.I P.
On 20 September 2025 at 3:40 pm JPHale said:
I agree, qualifications for the sake of regurgitation don't help anyone. But we know from other professions that good formal qualification improves the standard of the profession.
It shouldn't have to be said but all qualifications come with the need for both mentorship and experience to be effective and develop that professionalism.
The easy route is pull from other academic papers, and cobble together something that looks like it would do the job.
However, the approach needs to reflect the various disciplines with specific deeper understanding and skill.
Qualifications that are specifically focused on the skill set for a New Zealand financial adviser is the goal.
This includes aspects from legal and accounting professions, but also adds from math, IT, engineering, psychology, and social programs, with additional focus for areas of discipline.
Medical knowledge underwriting and claims, estate and trusts for life, expansion on social services, and legacy contracts for skills around servicing and replacement as appropriate. Business assurance skills fall out of the first bit.
Wealth seems to be quite well catered for presently.
General insurance, deep dive on risk assessment and geographic impacts for these risks. Climate and planning, as well. Also technology and other relevant skill bases for assessing and advising on property and liability risks.
Debt, without oversimplifying the area, funding types and structures outside the usual big bank stuff. Legal and ownership structures. Money market funding and international finance. Unique lending environments where cultural requirements demand outside the usual box answers.
Saying we need Level 7 is somewhat lazy, as Jeff said regurgitation of irrelevant information that doesn't help front line advice quality is a waste of time.
A tailored national qualification that is an extension to Level 5 which takes into account what our practicing advisers need and want rather than the outside looking in approach we have had will drive the improvement in professionalism.
But, even if the perfect extension qualification was to be produced, the majority of adviser still won’t do it until its made a requirement. Aka what we saw with Level 5 and March 2023…
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einstein about insanity: doing same thing over and over again, and expecting a different result.