Financial advisers maintain strong support for RDR

12 June 2009

On the eve of the publication of the FSA’s consultation on RDR, support among financial advisers for raising levels of professionalism remains strong, despite the difficulties brought about by the recession, shows the latest survey of opinion in the sector published today (12 June 2009).

The survey of CII/PFS members is the fifth of a series on RDR carried out by Ernst & Young, on behalf of the professional body. It looks at practitioner attitudes to the RDR, and is the first since the FSA’s November Feedback Statement.

The main findings include:

Three quarters (73%) say that they anticipate achieving further qualifications, up from last year

Two thirds (66%) agree that the minimum qualification level for advisers should be QCF/OfQual Level 4 or equivalent (diploma level)

Nine in ten (89%) agree that qualified professionals should have to meet Continuing Professional Development (CPD) requirements.

David Thomson, CII Director of Policy and Public Affairs, said:

“It is great news that an increasing majority (73%) of respondents envisage furthering their qualifications. This is up from the 70% in the last survey.

“However, our survey, like other recent analyses, shows a slight cooling towards the RDR process, and the recession must play a part in this sentiment. For example, while 60% agree that the RDR will lead to a more professional retail financial services market; this is down from 69% the last time the question was asked. We expect that the forthcoming consultation from the FSA will have a major impact on sentiment.

“Although there may be a slight hardening against the RDR itself, there is continuing support from practitioners for the professionalism element of the proposals, and a belief that the RDR will happen. The evidence of this survey, plus our exam booking data, shows that many advisers are already taking action following the FSA’s ‘no regrets’ declaration on improving qualifications.”

There are mixed views about the timescales for implementing the RDR by the end of 2012, although the qualifications element is viewed by most as tough but achievable. (21% think they will be achievable by most; 30% think that they are tough, but realistic; 28% believe that are unlikely to be achieved; and 21% that they are very testing).

There is, however, a much more optimistic view about adviser numbers, with the majority of advisers intending to stay in the market in some capacity when the RDR proposals are implemented. Contrary to some suggestions in recent months, only 12% of respondents say they would exit the market completely.

Other findings of the survey are:

Most respondents (70%) think that the RDR proposals will not damage their future career prospects, with over a third (35%) believing that RDR will actually enhance their career. 30% fear that RDR will leave them worse off. Two out of three (65%) believe that a person giving guided sales (advised or non-advised) should be part of a professional organisation

While enthusiasm for compulsory Level 4 qualification is high, most believe that Level 6 (CII Chartered Financial Planner, or honours degree level) is too high a requirement at this time (61% are opposed)

62% believe that qualified professionals should have to hold and display a valid renewable practising certificate (67% in October 2008).

PFS president, Paul Lothian, said:

“This latest survey reaffirms that the Personal Finance Society membership has embraced professionalism and all that it entails. We at the PFS will continue to offer essential support and guidance to those who join the march towards higher standards.”

Head of Insurance Advisory at Ernst & Young, Shaun Crawford, added:

“The RDR continues to have the general support of the independent financial advice industry. However, the third of respondents who believe that it will leave them worse off must act now to think about how they can turn this around to their advantage.

“For some, it may mean diversifying their customer base or specialising in certain elements of advice. For others it may mean thinking about joining forces with other more specialist IFAs to provide their customers with a wider range of advice.”

Ends

Notes

1. This report was undertaken by Ernst & Young for the CII/PFS, and involved an on-line survey of the PFS and CII Faculty of Life & Pensions members in May 2009. Over 700 members responded, of which 578 (80%) were authorised financial advisers. Among the advisers, 88% were IFAs and the rest single ties or multi-ties or bancassurers. The remaining 20% of non-advisers varied evenly across directors, managers, technical, sales force and compliance departments.

2. The results have been posted in full with a summary on the CII/PFS dedicated RDR site to view: www.thepfs.org/rdr

3. Earlier member surveys were conducted in September and April 2008, and September and October 2007, and are all available on the RDR website:

http://www.thepfs.org/pages/memberservices/RDR/professionalism.aspx#Survey

4. The FSA will be publishing a consultation paper on the RDR proposals later this month, following on from its Feedback Statement in November 2008 and qualifications update earlier this year.

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