Chartered status is often pitched as the ‘gold standard’ for financial advisers but it is not a mandatory requirement.
Aspiring advisers need to reach Level 4 diploma status to qualify and may continue studying beyond that to Level 6, when they can gain chartered status.
For newly qualified advisers, deciding whether to embark on the journey towards chartered status straight away, if at all, may be difficult. Some people are in their element when studying for qualifications, but others may find it more of a struggle.
Understanding what chartered status really means can help new advisers weigh up whether it is the way forward in their particular circumstances.
The new norm?
For years, commentators have predicted that chartered status will eventually become industry standard or compulsory. But so far this has not happened.
“The latest number I’ve heard is that around 12% of advisers are chartered,” says Five Wealth financial planning manager Olie Jones, an aspiring adviser.
If your clients are saying they need you to be chartered, then go for it
“So, I don’t think it is the new norm. But from the Financial Conduct Authority’s perspective I think there’s a wish to improve professionalism within the advice arena.”
Jones believes that the FCA would like to see financial advice reach a “similar level of qualification and trusted adviser status” to accountancy, corporate finance and law.
“Chartered status is the best tool to get to that position,” he says.
Starting Out: Helping young people take alternative routes into advice
Even experienced financial advisers such as Joe O’Connor, who is also chief executive of The Transformer – a business coaching firm for professionals and military veterans – have contemplated becoming chartered.
O’Connor’s view is that the need for chartered status depends on the individual. For some, it may be nice to have but not necessarily essential.
“I don’t know if or when chartered will become mandatory, but you can be an accountant without being a chartered accountant – and that’s been in place for as long as I can remember,” he says.
My son said, ‘Dad, I don’t need chartered status at this stage because I’ve got life experience as a quantity surveyor.’ I suppose it depends where you are in your life journey
Jones agrees to the extent that, because client needs vary, there ought to be a range of advisers to cater for them.
“Not all clients will necessarily need their adviser to have advanced qualifications in areas like trust planning,” he says.
No right or wrong
To illustrate that there is no right or wrong, O’Connor draws comparisons between a newly qualified adviser and an aspiring adviser he knows.
The aspiring adviser is a student who was diagnosed with ADHD and dyslexia a few years ago. Currently at university, his aim is to be chartered by the age of 25 and then achieve fellowship.
Not all clients will necessarily need their adviser to have advanced qualifications in areas like trust planning
“The reason he set that target is because he’s just done an internship at an IFA firm, where the youngest guy to get chartered status was 26,” says O’Connor. “He wants to prove that he can take information in and can do it,”
In contrast, the newly qualified adviser – O’Connor’s eldest son – is not currently focused on achieving chartered status. As a former quantity surveyor (QS), his priority is building on the transferable skills gained in his previous role.
“He said, ‘Dad, I don’t need chartered status at this stage because I’ve got life experience as a QS,’” says O’Connor. “I suppose it depends where you are in your life journey.”
If it ain’t broke…
O’Connor stresses that, for any adviser struggling with professional exams, it is important not to beat themselves up about getting chartered.
You can be an accountant without being a chartered accountant
“Just do your best and get what is necessary to become a financial adviser,” he says. “Then, once you’ve got that, continue developing your knowledge with the help of a mentor, regroup and – to use a military term – ‘test and adjust’ to your clients’ needs,” he says.
If clients are happy to remain your clients without your being chartered, O’Connor says there is no need to fix this.
“But, if your clients are saying they need you to be chartered, then go for it.”
A lot will depend on the type of clients an adviser or advice firm deals with. At Five Wealth, for example, Jones says clients tend to have more complex financial planning needs, so the firm prefers its advisers to have, or be working towards, chartered status. Other firms may have different requirements.
The latest number I’ve heard is that around 12% of advisers are chartered
If people want to become chartered but struggle with the exam side of things, Jones suggests making it easier by applying the practical things that they are doing or learning at work to their studies.
“People think it has to be the other way around – that you do your exams and then put that learning into practice,” he says.
In doing as Jones suggests, advisers should benefit from more of a connection between the theory and the practice.
Amanda Newman Smith is features writer for Money Marketing
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