Hemma Visavadia investigates whether advisers should have more regulated qualifications in order to advise clients on protection and, if not, what other options there are to help level up the sector.
Protection has historically been an industry that people fell into; rarely do people say it's a career choice. When people fall into something, qualifications aren't always the first thought that runs through their mind.
The vast majority of career paths increasingly require a range of academic and professional qualifications to even get in on the ground floor; the protection advice space, however, has only the R05 qualification as a minimum, although not compulsory, standard.
For all intents and purposes, the bulk of an adviser's protection expertise is something people learn on the job, through the study of policies, practical application with clients and knowledge from industry peers.
But is that enough to ensure consumers are receiving the best possible advice?
One of the ways to do this is through mandatory qualifications, according to a report by The Chartered Insurance Institute's (CII) New Generation Insurance Broking Group, published in July.
The group called on the Financial Conduct Authority to make it mandatory to have qualifications before being able to advise clients on cover, after finding that a knowledge gap existed within the broking profession that can have a direct impact on the level of customer advice.
The group concluded that by having mandatory qualification requirement or a minimum number of years' experience threshold for insurance brokers, customers will ultimately be able to reap the benefits of consistent, regulated advice.
"Qualifications will give you more knowledge than listening to a provider webinar or going on to one of the CPD-accredited events," says Setul Mehta, head of business development and adviser services at The Openwork Partnership.
"Having the qualification is good and important, but if you aren't regularly reviewing knowledge, it doesn't really work."
Base value
For someone coming into the industry, Mehta says that qualifications are hugely valuable and can give individuals a base level of knowledge "in the absence of everything else." However, using school exams as an example, Mehta highlights the difference between theoretical knowledge and practice experience.
"I know lots about security, diversity, inclusion and fraud through being in the industry, and I'm up to speed on all of that, but if you ask me about A Level science and maths, which I have sat exams on, I probably don't remember as much as I should do and some of that I will never, ever use."
"Given the choice between qualifications with none of the regular oversight and engagement or regular upskilling of knowledge and having those conversations, I'd probably go with the latter," he comments.
Roy Mcloughlin, associate director at Cavendish Ware, shares Mehta's view, suggesting that if mandatory qualifications were to come into effect, examining boards should engage further with the advisory community to find out what type of qualification would work, what information is vital and ultimately to "ask our advice."
"Let's face it, we're probably the best people to offer advice on the appropriateness of what's being asked," he says. "It's a combination of qualifications and training which can be particularly helpful for people that are thinking about entering protection."
Meanwhile, Tony Müdd, protection expert at St. James's Place, says he would ultimately like to see everybody who sells protection, or advises on protection, be qualified. However, his reservations centre on the fact that there aren't enough people in the UK buying the products.
"I would be concerned that advisers would come out of the industry as a result of qualifications, but the bigger issue for me is that 50% of all protection sales last year were non-advised," he explains.
"So, by definition, those people who are getting non-advised protection are from people who are not qualified, because they're not giving advice, they are giving guidance."
Finding the balance
Justin Garbutt, distribution director at Vitality, says there needs to be an understanding as to what these theoretical qualifications mean, as well as guidelines to help individuals follow them.
"If you have a track record in the life insurance industry, would that person be required to write an exam? Probably not, because they've got a record of demonstrating that they're giving good quality advice to clients, there needs to be boundaries," he says.
The wealth industry, for example, should be "heavily qualified because we base it on people's pensions, which is their livelihood," Garbutt states, but that there should be a minimum standard in the life space: "You can't train for two weeks and call yourself an adviser."
There needs to also be a balance between experience and qualifications and making sure that there are enough people coming into the industry to service and serve it, Garbutt comments.
"You have to create an industry that people are attracted to and don't have these high barriers to entry. As soon as you put these big qualifications in place upfront, it creates a barrier to entry for young people joining, and so on."
However, Garbutt says that once in the industry, people will have to live up to certain standards and that it's up to advisers and providers to make sure they keep enhancing their knowledge and ability to advise clients.
In a bid to help advisers gain more protection knowledge without qualifications, Vitality recently partnered with Access Financial on a 12-month training programme. Through the partnership, Access has tied its protection business to Vitality in exchange for additional training opportunities for advisers.
Partnerships such as the one with Access were first introduced nearly two years prior, as Garbutt explains: "By partnering with people like that, it gives us the confidence that we're actually involved in the education and their training so the business coming through to us, we feel far more confident that our clients are getting the appropriate advice."
Qualifications vs. Experience
In most cases, employers will evaluate the merits of qualifications and experience on separate metrics based on the role and the required skillsets of potential hires. Sometimes one will outweigh the other, but is that the case in the protection world?
"For someone who has been in the industry for 20 years and has done and seen it all, but never got the qualification, he or she probably could do just as good a job as someone newly-qualified," Müdd comments.
While he says it should be enough to possess the relevant experience in protection, Müdd also believes that industry participants should be taking qualifications in order to keep pace with market developments as it "gives the receiver some comfort", highlighting that underwriting is now a very different process to what it was 20 years ago.
"There have been different entrants into the market. This year alone has seen probably a dozen or so new contracts come onto the market, and more than two dozen changes to underlying contracts," he says.
"So, it's all very well saying someone with experience, but if that's all they've got, and they're not keeping up to date, then they're not giving good advice either. So ultimately, I think qualifications do that."
