Take greater control of your firm’s T&C
Training and competence (T&C) has an important role in supporting adviser firms’ Independent status and should not be left to individuals, says ATEB’s Steve Bailey
In the past, training and competence (T&C) was an area where often a more tick-box approach has been adopted by advisory firms, with experienced individuals left to their own devices, on the basis that “they know what they’re doing”. However, RDR has prompted many Independent firms to re-visit this area to ensure T&C has greater structure and control within the business. The following are four areas that, in our work with advisory firms, we see are fundamental for firms to review and address.
1. Demonstrating wider knowledge
In our view, the standard for Independent advice cannot be achieved without demonstrating a wider knowledge and awareness of retail investment products (RIPs) and non-RIPs. We feel this must be one of the main drivers behind proving the ongoing competency of any adviser describing themselves as ‘Independent’. Without evidencing such knowledge and awareness how can an individual be deemed competent as they seek to deliver ‘a comprehensive and fair analysis of the relevant market’?
2. Improving standards
RDR has seen us witness a number of development initiatives aimed at maintaining and improving Independent standards. The key developments have mainly focussed on updates or improvements to:
• Strategy and business model
• Firm Proposition
• Field Advice Process
Many firms are focusing their T&C efforts on how they will deliver independent advice to the market, and the positive outcomes this will deliver to their clients. Much of this development work is driven by independent firms refining their business model post-RDR. Most have re-launched their independent proposition to clients. In doing so, they have recognised that a major key to success is to ensure their staff fully understand their proposition, have bought into the benefits, and can successfully communicate those benefits to clients. We also see firms re-visiting their field advice process to ensure application is consistent and compliant. Firms have been able to validate success here with role-plays, observed client meetings and file checks. The elements of the advice process where we have seen significant improvements include disclosure and charging, risk and capacity for loss, market research and due diligence, and identifying and addressing client needs.
3. Continuing professional development (CPD)
CPD is so important, it has a dedicated section in the TC Sourcebook and you can’t have a Statement of Professional standing without it. For those two reasons alone, it’s clear that any Independent firm must maintain a robust and effective approach to CPD.
The TC Sourcebook CPD requirements are:
• A firm must ensure that a retail investment adviser who has been assessed as competent remains competent by completing a minimum of 35 hours of appropriate continuing professional development in each 12-month period.
• A retail investment adviser should complete no less than 21 hours of structured continuing professional development activities.
We sometimes see firms and advisers struggle to identify and record robust CPD. The recent FCA Positive Compliance Workshop provided a neat summary of what CPD needs to be – specific, relevant, measurable and verifiable. It should address knowledge and skills gaps.
Relate those measures to the requirements of the Independent firm role and you should have a framework for robust CPD.
We often come across individuals struggling to differentiate between structured and unstructured CPD. The T&C Sourcebook does offer guidance, but we would offer up a simple ‘test’ to determine if an activity is structured – think of an audit trail consisting of a learning objective, a development activity and a learning outcome. If you can demonstrate an audit trail linking the learning outcome to the original learning objective, you have structured CPD.
4. Record keeping
There are two golden rules concerning T&C record keeping. Firstly, we recommend you clearly document your T&C plan. Secondly, be sure that your actual activities match the plan and this is recorded. RDR has presented Independent firms with a great number of challenges and opportunities, requiring significant training and development work. However, T&C should not be seen in isolation, it’s important you are also able to evidence the impact your efforts have on your firm’s culture, staff behaviours and client outcomes. So we recommend that you document and evidence how you, as an independent firm, have embraced RDR.
In an effort to help firms, ATEB developed a ‘Competency Matrix’ tool, which sets out knowledge areas a typical Independent firm would be expected to be aware of and this provides a framework for training and development activities.
Visit ATEB website
Another ATEB company, ViiCO, provides a series of regular structured CPD seminars for advisers wishing to maintain their knowledge competency and address knowledge gaps.
Visit ViiCO website