The changing face of the protection market means there are more demands on advisers to stay ahead of the game. Bob Bullivant explains what training options are available
It used to be that a few days training was all that was needed to sell life assurance. So why has there been a sudden flurry of seminars on the Financial Planning Certificate (FPC), Advanced Financial Planning Certificate (AFPC) and Continuing Professional Development (CPD) springing up over the last few years? The answer is simple - a few days of training in the 1980s brought us that well known adviser - the unconscious incompetent who prospered throughout that decade at the expense of his clients and who was highly successful in giving the industry the reputation it currently has.
Consequences
Harsh words? Perhaps, but our business in general - and protection policies are no exception - is complex and an adviser who is not properly trained can bring down the law of unintended consequences on his clients. What then is the appropriate level of training and what courses are available?
The level of training required will depend on the market being targeted by the adviser. For someone who is going to confine their practice to basic protection products, the FPC will provide an adequate level of knowledge that will enable them to practice compliantly and effectively. Knowledge will also need to be continually topped up through a CPD programme.
Advisers wishing to specialise in areas such as Inheritance Tax (IHT), long term care (LTC) or business financial planning will need to consider a more advanced course such as the AFPC. There are three AFPC subjects worthy of consideration:
•G10 - taxation and trusts. This course will give a good working knowledge of the tax system as it applies to Income Tax, Capital Gains Tax and IHT. It will also provide a good working knowledge of trusts and their uses. This course will be vital to anyone who is aiming to advise clients on the area of IHT. Not only will it provide a good knowledge of IHT, it will enable an adviser to deal effectively with a client's other professional advisers.
•G80 - LTC, life and health protection. This course specialises in protection products including LTC. From October 2004, those wishing to practice in the area of LTC will need to pass an appropriate examination. The Chartered Insurance Institute (CII) anticipates that those who have passed G80 will be 'grandfathered' in. This is a highly complex area requiring a good understanding of State benefits and Local Authority policy.
•G30 - business financial planning. This course covers the structure of all types of business - sole trader, partnership and limited company including tax treatment. It also includes a comprehensive section on the protection needs of a business, including key man, partnership and shareholder protection and employee benefit schemes.
Some cynics may say that if they have got this far without doing an AFPC, then why should they bother? There are a variety of answers to this. The simple answer is that under a menu system, charges will have to be laid out in some detail. The qualified lawyer can charge more than his trainee and it will be the same with advisers - those who are most highly qualified will be able to charge more for their services.
At the more complex end of the market the client is likely to wish to involve his professional advisers, such as an accountant or solicitor. These people will expect the financial adviser to be clear about issues such as buy and sell agreements and trusts. In short, the knowledge gained from higher levels of study will enable you to practice alongside and work with the mainstream professions.
Knowledge is power
It is even more important for those wishing to break into the business protection market. The person who is most likely to deal with such issues is the finance director and he is unlikely to suffer fools gladly. A good knowledge of corporate tax as well as the ability to counsel the company in its protection needs will be a prerequisite for this type of business.
For those wishing to take their qualifications further, there are a number of options and help available to those who wish to study. A good starting point is to join The Society of Financial Advisers (SOFA), which is a faculty of the CII. Membership brings a whole host of benefits, including discounted prices for study materials and courses. Membership costs from £138 per year and this can quickly be recouped from discounts.
A full study workbook is also available from the CII. You should however be aware that the AFPC is pitched at degree level and therefore, advisers doing this course will be required to carry out additional reading. A common misconception is that the examination is based on the book - it is not, it is based on the published syllabus.
Most people will find it difficult to carry out a full-time job and study. For this reason, additional help comes in a variety of guises:
•The SOFA technical seminar is a programme of events run countrywide that is designed to help you learn and top up your knowledge. They are half to one day courses run by a team of experts on a variety of subjects and include revision days for AFPC subjects.
•SOFA regional meetings are run periodically and are free to members. They cover a range of subjects.
•SOFA runs 13 week AFPC study groups in certain areas of the country. Availability depends on being able to locate course leaders and also on having sufficient numbers of delegates.
•The annual update conference is highly regarded as the leading technical event. It takes place over two days and includes a protection stream as well as pension investment and business development. SOFA members receive a discount.
•All members also receive a copy of Technical Adviser. This is a quarterly magazine that includes a variety of technical articles, a back to basics page and a news section. It has an excellent reputation for dealing with technical issues in detail.
Opportunity
There is a world of help out there to assist advisers in developing their career. A further incentive is the award of SOFA membership designations for those who have passed AFPC subjects. This in turn allows you to be included in the 'find an adviser' section of the SOFA website, where each month over 6,000 consumers seek an independent adviser. The site allows you to list your areas of specialisation.
The key point about study is that it should enable you to fulfil your potential. While the FPC will allow those who wish to practice in the basic protection arena to do so competently, at whatever level you practice, you will need to keep up-to-date and that is where CPD fits in.
Unfortunately nothing stands still for long. As a minimum there will be one Finance Act per year that will change various rules and you will need to attend courses or study just to keep up. Much has been written about CPD, but it is a simple and important concept and advisers should ask themselves the following questions to ensure they stay ahead of the game:
1. What knowledge and skills do I need to be competent in my current job/area of practice?
2. What skills do I have?
3. What knowledge and skills do I need to acquire to remain competent in my current job?
4. What knowledge and skills do I need to move to my next job/area of practice?
5. What knowledge and skills do I have that will help me in my next job/area of practice?
6. What knowledge and skills do I need to acquire to move to my next job/area of practice?
Having answered these, a CPD plan can then be developed and worked through. In effect, you are assessing the knowledge gaps in your current practice area and in areas you wish to be involved. The result is your CPD plan. It is important to document all of this so that you can continually assess your ability, particularly as things change. The result will be a constant development of your knowledge and skill which will lead to a continual development of your practice.
Today's business environment is complex and fast moving. For those who can keep up the pace there is a world of opportunity out there. To compete, you must be up to speed and you must be knowledgeable. Those who attain competency in their chosen area, and who can maintain competency in that area, are unlikely to be troubled by the regulator.
Bob Bullivant is managing director of SOFA
COVER notes
•The level of training required depends on the market the adviser is targeting.
•For advisers selling basic protection products, the FPC will provide an adequate level of knowledge.
•Membership to SOFA starts from £138 per year.
