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Is an A-level qualification enough for financial advisers?

Frog on a pile of coins

Have you ever used a financial adviser to help you out with a money decision? Did you stop to ask about their qualifications? Most of us don’t, and yet a ‘qualified advisor’ may only have an A-level equivalent.

When you take financial advice, whether it’s about planning for your future, investing money or choosing a pension, you’re putting your money and future in the hands of others.

You’ll probably assume that your adviser is qualified, but have you ever stopped to wonder what these qualifications actually mean? And did you realise the minimum qualification for an independent financial adviser (IFA) is only equivalent to an A-level?

Standard of advice needs to improve

The impact of receiving bad advice can be disastrous. Standards of advice can be shockingly low and our mystery shopping of the sector always reveals worryingly poor performance – 60% of advisers failed to pass all our benchmarks for good investment advice, for example.

The industry’s been dogged by mis-selling scandals and horror stories of elderly people losing thousands of pounds due to poor advice from Barclays. It doesn’t paint a pretty picture, but thankfully our campaigning is paying off and the regulator has agreed that standards must rise.

Still, the proposals are now facing a backlash from a small number of IFAs who don’t want to raise their qualifications, so the practice continues.

When I eventually need to seek ‘professional financial advice’ I would expect the adviser to be at least qualified to the first year of a degree, and if I’m honest, even higher than that. I now know I need to be extra vigilant about checking the next time I have any life-changing financial matters to sort out.

What’s been your experience of IFAs? Do you think the current standards are high enough or are you shocked to hear about the current minimum requirements?

Do you support plans to increase the qualifications of IFAs?

Yes – they should be higher-qualified than A-level equivalent (81%, 112 Votes)

No – A-level standard is sufficient (19%, 26 Votes)

Total Voters: 138

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7 February 2011

There was a story in the news recently about a gentleman who became Director of a Bank (!) with a forged CV – nobody bothered to check whether he really went to Oxford/ Harvard.
Nobody checked whether he had really worked for JP Morgan.
So much for safety and security of our banks!
Though I don’t know whether this gentleman had A-levels.
See the amazing story here

Qualifications are almost irrelevant except to get a job.

Someone with a Ba in Finance can be totally useless to advise

Someone with no qualifications at all can be brilliant in explaining clearly your options. And give a well thought out set of recommendation

Specialised training and the ability to absorb facts and understand financial products is all that is needed, not a degree !
In the past most people managed with A levels – only 5% went to University.

Jack Morrell says:
8 February 2011

I think there should be a specific degree level qualification for financial advisers which is complulsory for advisers holding themselves out as being competent to advise on all aspects of financial advice. Financial advice is every bit as complicated as professions such as law or accountancy, and the barrieers to entry should be just as high.

If advisers can’t or won’t get this qualification, the arease in which they are allowed to advise should be narrowed down to the less complex areas – so they can stay in business but are prevebted from advising in the more complex areas (eg income drawdown).

In my experience, there is little correlation between qualifications and competence. Competence and moral character should be the key factors. In an ever changing market, the ability to understand clint ambition and need, then match that to available products, is more important.

Although, rationally, “there is little correlation between qualifications and competence” so that “specialised training and the ability to absorb facts and understand financial products are all that are needed, not a degree”, I agree wholeheartedly with Jack Morrell’s comments above as it would demonstrate an ability to undertake research, analysis, differentiation, and exposition together with some evidence of application and diligence. I think the degree-standard course should have at least one compulsory component from philosophy, psychology, economics, social studies, or similar, so that when we see the initials QFA [qualified financial adviser] we can place some reliance on their efforts [I know, . . . all GP’s have degrees these days. . .] and hold them accountable. Having said all that, though, how are we supposed to get a measure of their actual, current, competence?

I’m sorry – Qualifications and courses do not make competent operators.

My long experience of teachers gives really excellent indications . All now have degrees – All go on a practical teaching course incorporating one compulsory component from philosophy, psychology, economics, social studies, or similar. A good number are incapable of effectively teaching.

I also taught a number of subjects – at school and Uni – A great many could pass the course including practicals – but fail dismally when attempting a real life problem outside of the classroom..

The same applies to IFAs


Whilst I agree IFA’s should have more than just an A qualification to do the job as there are specialist functions within the whole financial advice arena, there are far more important questions to be asked by the investor of the IFA re tied/not tied, commission or fee, AMC’s etc. That is just as likely to have a more significant effect on the returns you get on your investment than qualifications.

If you really want to tackle the IFA issue tackle it in its entirelty not just part of it

Jack Morrell says:
14 February 2011

I agree with Richard that qualifactions and courses alone do not make competent advisers – but giving full advice to the public should be a profession and getting and retaining the right qualifications should be one of the things that is asked of you. If you see a doctor you know that experts have judged him competent to heal you – against a very high standard – you also expect him to have ok people skills. If you see a financial adviser for the more complex advice, given the damage that can be done if it goes wrong,you should have the same confidence that experts have judged him competent to advise. Law is not a bad model. You need exams to get to a certain stage but then exams are over and it’s 2 years’ practical training before you can say you are a lawyer.

PeterD says:
13 February 2012

While it may be true that having qualifications does not ensure competence, we should certainly be concerned when someone charging a substantial fee, whether charged directly or as sales commission, and claiming to be a professional isn’t able to demonstrate their competence by being able to achieve a reasonable qualification.

The current Level 3 qualification requirement for IFAs, as Treasury minister Mark Hoban and the FSA pointed out, is only the equivalent of that awarded to under-managers at MacDonalds. Even your hairdresser is likely to be better qualified. The majority of IFAs are former salesmen of some kind and unfortunately their sales ability is considered more important than their financial knowledge.