Where do aspiring financial advisers excel and where do they tend to struggle?
Understanding those answers will help firms appreciate how they can shape their training and recruitment. It means adviser businesses can focus on enhancing skills in the areas of relative weakness, ensuring that they plug any skills shortfalls and guard against risk in the process. And it means new and trainee advisers can appreciate which areas they might need to focus on to be the best adviser they can and streamline their qualification pathway into the profession.
By understanding the element of study that young advisers find most challenging, we may be able to identify and address barriers to entry that delay or prohibit aspiring advisers from gaining the relevant qualifications.
We’ve studied the performance of trainee advisers at the Financial Adviser School (FAS) to identify areas where students have to study the hardest to obtain the necessary grades. They tend to centre around regulation. The three modules students find the most challenging are:
· The regulation of Financial Services.
· The FCA’s responsibilities and approach to regulation.
· The legal concepts relevant to financial advice.
There are a number of reasons for this. First, the nature of regulation can be difficult to reconcile with the job conducted by advisers. When you prepare to go into people’s homes and navigate their finances regulation can feel distant – good financial planning surely does not change just because of regulations that have been drawn up in London or Brussels?
Many aspiring advisers are also conscious clients will be leaning on them for tax and personal financial planning expertise. The end client is unlikely to be seeking an adviser capable of reciting verse from the Financial Conduct Authority handbook. And where clients are interested in regulation, it typically only goes as far as wanting to be certain that they are receiving a regulated service and the adviser communicates regulatory concepts in simple terms where it is necessary.
So while candidates understand regulatory modules are an important part of the FSRE programme, it is not always immediately obvious how those study topics lend themselves to financial planning at the coal face.
Helping trainee advisers recognise the relevance of regulation to the job they will be doing once they qualify is a worthwhile exercise. Understanding the fundamentals of the FCA’s roles and responsibility provides grounding for a healthy relationship with an adviser’s network or compliance support function, for example.
Likewise, while the legalese surrounding trusts or property ownership may feel secondary to their practical application in the financial planning process, a grasp on the language and particulars of the legal concepts is useful foundation knowledge. The power of attorney processes and the relevant laws also change as society adapts to the challenges of an ageing society and the rise of age-related illnesses, so a firm grasp on the legal principles underpinning the power of attorney legislation, for example, could therefore be extremely valuable.
With complex subjects, it is encouraging to see our school's students demonstrating an aptitude for elements of the course that focus on client need, service and engagement, such as:
· How the retail customer is served by the financial services industry.
· The skills when advising clients.
· The code of ethics and professional standards.
The advice skills element of the FRSE programme addresses customer communication, the fact-finding process and identifying client needs.
The element of the course focused on relationship-building and empathy is perhaps one of the most important for new recruits into the industry in that it relies in part on student’s instincts for personal service, rather than technical knowledge. Of course, applying that theory in the exam is not the same as applying the learnings on the job, but it suggests that young advisers are demonstrating appetite and understanding for the importance of professional client-focused service in the industry.
Darren Smith is head of the Financial Adviser School
