Exams have become a constant factor in the lives of advisers since the RDR made Level 4 qualifications compulsory. With an increase of almost 2,000 CII chartered financial adviser members since the RDR, upping one’s qualifications now bears more significance in the financial services sector than ever before.
It also means that juggling day-to-day work and exam preparation has become an indispensable skill.
Despite the frequency with which advisers are taking exams, summoning the drive and time to study paper after paper can be difficult. Alistair Cunningham, financial planning director of Surrey-based Wingate Financial Planning, says his biggest tip for exam preparation is simple. He says, “Look at the past papers, because that gives you an idea of the sort of questions examiners ask. I give that advice to my children for their school exams. Examiners tend to have certain themes and ways of asking questions and sometimes it’s the best way to revise.”
Although Mr Cunningham admits this is common knowledge for many, he stresses that a great deal of the work required to pass financial service exams is “more about exam technique” than anything else.
While the number of advisers undertaking higher qualifications has increased considerably, the CII pass rate for financial planning qualifications over the past two years indicates that some units prove particularly difficult. For example, the Level 4 Diploma in Financial Planning unit R04: Pensions and Retirement Planning had a pass rate of just 49.53 per cent in 2015 and 54.09 per cent in 2014.
Susan Hill, a chartered financial planner at Susan Hill Financial Planning in Buckinghamshire, says using a variety of study materials and resources, such as attending CII-hosted revision sessions, is as important as fine-tuning techniques. She says, “At the Insurance Institute of Watford we put on study days to help candidates. Ask your local CII institute to run a course for you.”
The Level 4 qualification, which varies from body to body, can feature both multiple-choice and written papers and often requires candidates to draw on a variety of skills for the different units.
When it comes to the written portion of the qualification, candidates have more opportunity to use their everyday experience to inform their answers. Ms Hill recommends treating the written exam as though you are writing a suitability report. She says, “You already know how to write suitability reports. Follow the same pattern and technical depth, using bullet points as you would with a client.”
The increasing prevalence of exams in the financial services sector notwithstanding, the RDR has enforced qualifications which can be misunderstood or overlooked by clients, unlike similar qualifications in law or accounting.
Highlighting the fact that regulation of the UK financial services space has only been in effect for three decades, Kim Barrett, financial planner at Barretts Financial Solutions, says that more support is needed from the FCA to spread awareness of the RDR-compliant qualifications.
He says, “You have got to remember that law and accountancy have had more than 100 years to get to where they are now. We are three years down the road and the general public hasn’t got a clue what the RDR is all about.”
Mr Barrett is not alone in his thoughts. In an FE survey from June 2016, almost half of the 200 advisers questioned claimed to feel less than confident in their clients’ understanding of their services.
One thing that clients do seem to recognise as a marker of authenticity, however, is chartered status – the Level 6 qualification. Mr Cunningham says, “We get people who come to us and say, ‘I want you to advise me because you are chartered.’ That’s quite a big positive.”
Beyond the general understanding of chartered status, though, Mr Cunningham echoes Mr Barrett’s sentiments, believing there is still “a lack of clarity” where qualification levels and status – for example, independent versus restricted – are concerned.
He says, “I have never been asked to show my SPS [statement of professional standing], which proves that I am qualified and a member of a professional body.
“All you have got to do is watch programmes such as Panorama or [BBC radio programme] Money Box to realise that [clients and prospective clients] don’t bother to look at the FCA register. If people can’t work out that people are not authorised, then what hope is there for people who are trying to elucidate between levels of qualifications?”
In spite of client confusion and the initial backlash that the RDR inspired among veteran Level 3 certified advisers, many of which opted to leave the industry as a direct result of the requirement, it is clear that with more than 5,200 chartered CII members and 8,000 en route to chartered status, a fair share of financial advisers recognise the value of regular testing.
Personal Finance Society chief executive Keith Richards says, “While the mandation of Level 4 was a difficult transition for some advisers, the majority acknowledge that it has improved their level of technical knowledge and expertise, motivating many to take advanced papers moving them closer to achieving chartered status.”
Ms Hill had surpassed Level 4 by the time the RDR was enforced and believes that “everyone should be at Level 6” after five years of service as an adviser. She says, “Being chartered presents an advantage because people know what it means.”
While being chartered can be useful, the three-hour written exam is considerably more advanced than lower qualifications, which in turn means putting in more hours of revision.
“Preparation is key,” says Ms Hill. “You need to understand how the paper is set out. The questions follow a pattern, that means working through the last few years’ papers, writing out the answers, learning mnemonics, reading the examiner’s comments.
“Even if you fail, keep going and re-sit; once you pass you forget the failures along the way. Education and learning are part of this profession. Don’t ever shy away from learning new material.”
Despite failing several O Levels at school, Mr Barrett, who is a chartered fellow of the Personal Finance Society, says the key to him passing his Level 4 qualification and eventually gaining chartered status was “motivation”.
He says, “This is the watchword here, you don’t have to be super intelligent to do exams, you need to be motivated. If I can do it, anybody can. I think all of us, certainly practising advisers, should be able to pass the level of exams the CII throws in front of us.”
While passing Level 4 and reaching chartered status are both important components of working in the financial services sector, exams are also exploited as a means of keeping up-to-date with regulations and refreshing knowledge.
Not long after the pensions freedoms were announced in 2014, more than 7,000 financial planners, paraplanners and others in related roles took it upon themselves to take the CII Pensions Reforms paper, which was launched in April 2015.
“There’s a whole raft of reasons for doing exams,” says Mr Cunningham, who believes that practical experience is just as essential as taking papers. “There are different ways to improve. We have got specialists in dealing with vulnerable clients and older clients: you can’t really learn that in an exam, so they’re not the be all and end all.”
However, Mr Cunningham adds, “An adviser who is willing to go out and spend the time to do his qualification is more likely to be of a higher standard than someone who is not. If you don’t want to do the studying, don’t go down a professional route. You make time to do anything important.
“You can’t go out and do anything to make yourself older or more experienced, but you can make an effort to go and do some exams.”
kuba.shandbaptiste@ft.com
