The UK regulator has joined with Chartered Insurance Institute (CII) to create a voluntary re-assessment test of the level 4 Diploma in Financial Planning. The Regulated Retail Investment Adviser Re-Evaluation will consist of 100 questions and will prioritise suitability.
The FCA stated the diploma had become the standard for advisers since level 4 qualifications became a requirement under the retail distribution review. But it said many advisers are never retested on their knowledge. Instead, the regulator requires advisers sit 35 hours of CPD annually to maintain their knowledge.
Advisers lack investment qualifications
But GBI2 managing director Graham Bentley said retesting advisers does not change the fact the syllabus lacks sufficient investment content.
“The question is whether financial planners should be any less well qualified than a discretionary fund manager when a lot of these people are running model portfolios on platforms.
“If you are, for all intents and purposes, going through the process of investment management in the sense of doing asset allocation and selecting funds and so on and so forth you would imagine that a particular investment qualification might be more appropriate than a generalist one.”
CII chief executive Keith Richards said the reassessment is voluntary and will help participants identify their specific learning needs. “There are no downsides to using the system for learning and to test knowledge.”
Diploma of Financial Planning vs IMC
The Investment Management Certificate (IMC) offered by the CFA UK is entirely about investment, bar one section on regulation, and therefore more suitable for financial planners conducting investment activities, Bentley said. The IMC is also level 4.
The CFA UK said 33% of IMC graduates are in an investment-focussed role, such as portfolio manager, research analyst, trader or risk manager. A further 15% are in a client management role, such as wealth management or private banking. It did not have a breakdown of how many graduates are advisers. Last year 5,131 candidates sat the qualification.
He added that the CII is an insurance-based body. “That is a clue to the fact that it’s rather more about product rather than pure investment other than that which applies to funds.”
The reassessment test will be based on R0-5 of the diploma. Investment principles and risk represents one module out of six included in the qualification and account for 20 credits out of a total 100. Other modules cover regulation, tax, pensions and retirement planning, financial protection and financial planning practice.