Three in ten advisers would consider leaving the profession if the FSA's bid to split the market based on qualifications came into force tomorrow, research suggests.
Analysis of the views of more than 400 IFAs by consultancy firm NMG suggests 30% of advisers would opt to leave the sector, or become a ‘Primary’ adviser, over taking the extra examinations required to fit in with the regulator’s new proposals.
The FSA proposed in the Retail Distribution Review (RDR) the consumer sector might be better served if a new breed of adviser – the ‘Primary’ adviser – joined the current crop, which would be split into Professional Financial Planners (PFPs) and General Financial Advisers.
The FSA reports there are around 5,340 registerered IFAs in Britian.
Primary advisers would need the least qualifications, followed by General Financial Advisers, with PFPs being the most qualified.
NMG says, based on feedback from IFAs, the industry could face a huge problem if the FSA’s proposals are backed by the industry and rubber-stamped.
According to the firm, 80% of advisers do not hold the appropriate qualification for their chosen designation under the RDR proposals.
It says advisers are currently split down the middle in their likelihood to adopt either the PFP or General Financial Adviser designation, with the Primary adviser role being largely rejected.
It adds initial adviser reactions to the proposals show less than half of prospective General Financial Advisers are committed to taking the additional professional qualifications required, with many likely to leave the sector as a result.
David Burns, director of NMG, says: “There is clearly a large qualification gap in the adviser community which will have a dramatic impact on the choices made by advisers should the retail distribution review proposals be implemented.
“Our analysis of the immediate response of IFAs to the proposals shows that the future looks doubtful for the General Financial Adviser, given the resistance of advisers to taking the requisite additional qualifications.
“We do however see the successful emergence of the Professional Financial Planner, and this role is likely to emerge as the more attractive one to those considering entering the adviser community.”
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