David Greenslade, director of training provider Strategi says at the end of April more than 100 people who are mostly new to the industry enrolled to do the New Zealand Certificate in Financial Services (Level 5) version two - NZCFS5(v2).

“This is indicating there is a significant number of people out there who are considering financial advice as a career.”

He says the average age of the newcomers is slightly younger than in the previous two years–dropping from 42 to 36.

“The age coming down is a good sign for the industry and really positive.”

Strategi is adapting how it provides training to suit the newcomers.

“The way you support newbies is slightly different to those who have been in the industry for years. They are less likely to want classroom-based courses and are used to self-paced study and using video. We’re providing tutorials that will run in the evening because they are in jobs and boosting the level of support material because they need a bit more in depth information to understand the context behind things.”

Major assignments will continue but more ongoing self assessment will be built into courses. “They are used to the type of education delivery that you’d expect at university,” says Greenslade.”

This new group contrasts with the cohort which enrolled between 1 September last year and March when the new regulatory requirements for the NZCFS L5 came into force. Greenslade estimates that at least 70% of that group was practising advisers who needed the qualification to continue providing regulated financial advice.

He says the course usually takes six months and he had expected people in that group to complete the course to a high standard in order to keep practising.

However 409 (37%) have still not submitted at all and the quality of assignments that have come in has significantly deteriorated with a vast number having to resubmit three times to pass.

“It’s clearly evident that some people who had been operating for some years regarded Level 5 as a tick box exercise rather than understanding the required standard to which they have to deliver advice.

“When it comes to assignments, in many cases they hadn’t read the question properly so only answered half, hadn’t read the material and put down what they thought, based on past experience, or not looked at all the assets in the case studies.”

Strategi has followed up with the non-starters with people saying they have put studying on hold, their role in their organisation has changed meaning they no longer need the qualification, their business has moved to wholesale as opposed to retail, or they now offer information-only services as opposed to financial advice. Some have decided not to be financial advisers.”

Greenslade says those who have stopped were possibly older advisers who had delayed retirement until the end of the two-year transition period.

His concern is whether those who still haven’t qualified are giving advice in the marketplace. “There just doesn’t appear to be a whole heap of urgency from people to submit assignments which is surprising because if you were practising before and you can no longer practise without level 5, you think you would be submitting.”

He says most are “at the smaller end of town”,  single operators two to three people in a firm.

Greenslade says it will take another 12 months to get an accurate feel for how many financial advisers may have left the industry because people still have another three months to go before they have to renew.

“I would say they will wait until their annual registration comes up for renewal. Also nominated representatives don’t go on the [financial services provider] register.

“Once the annual regulatory return regime kicks in from the middle of next year, that information will be available through the Financial Markets Authority.”

Greenslade says unlike Australia where raising the regulatory and educational bar resulted in a massive loss in financial advisers, he does not see that happening in New Zealand.

“There has been massive fear mongering, without statistics, that the regulatory change will cause a loss. We’re right at the leading edge and we aren’t seeing it. Moving forward the industry is in good heart. I think the regulatory balance is about right in New Zealand.”

In a typical year Strategi has had more than 1000 registrations and very high completion rates with most people only having one or a maximum of two resubmits on assignments, he says.