The NZCFS Level 5 version 2 is undergoing a five year review mandated by NZQA. The review is run by Ringa Hora - Workforce Development Council to ensure it remains useful and relevant.

NZQA needs to approve the new qualification and then allocate an expiry date for the current version 2. Within that time frame, education providers must have commenced providing the new approved version. In the past, that phase in period has been around 18 months but there is no guarantee it will be the same this time.

While the NZQA approves the new version it will be up to the Financial Advice Code Committee to adopt it as an industry standard.

Strategi executive director David Greenslade is on the industry working group that is reviewing level 5 version 2 with Ringa Hora.

“We are looking at the existing qualification and where we think the industry will be in five years - what sort of technology and additional skill sets advisers  will need, what legislative changes might have occurred, what client expectations are likely to be”

Soft skills and training on conduct and ethics are being considered, says Greenslade.

“A better understanding of what makes a vulnerable client, why clients engage or not with the financial advisory industry, the components of their decision making process, why some make good decisions and others poor decisions - it's all of those soft skills that help advisers better understand and customise their advice as opposed to a cookie cutter approach.”

Information on the principles and fundamentals of ethics will also be included.

“Where the code says to act with integrity and prioritise clients interests, it assumes people tangibly understand what that is because they’ve received basic ethics training.”

On the AI front, the working group is looking at information on what it is, how it is applied to financial advice, and its advantages, disadvantages and risks. Greenslade says this encompasses blockchain and cryptocurrency.

Responsible and ethical investment, ESG and greenwashing would go into the investment strand of the qualification, he says.

Concurrently NZQA is starting to move from unit standards to skill standards which are more focused on outputs than theory, says Greenslade. The aim is to make qualifications more practice-based.

He says there will be a rearranging of priorities within the curriculum so that the new version won’t take longer to complete although it may get slightly bigger. There will be bridging modules between versions 2 and 3 that current advisers will be able to do as part of CPD.

“No-one says you’ll have to do it right away. That’s why there will be a phasing period of 18 months to two years.

Challenging the process

Guy Dobson, managing director and founder of Dynamique, a company that sells systems to the wholesale market and has a spinoff providing training content to in-house financial advisers is sceptical.

He questions the need for a review right now given recent regulatory changes and thinks there is a risk of people leaving the industry. Instead he would like to see things run as they are for another few years before having a review.

He also has doubts about education providers and firms offering financial services being on the working group and wonders whether the NZQA is the right body to provide qualifications to the financial advisory industry.

“The key thing for any qualification is to make sure the outcomes for the clients are better. The changes themselves should reflect the current dynamics and environment in which financial advice is provided. At the moment it is quite a stressful environment for many financial advisers because of the state of the markets. 

“I think the key thing is the necessary base understanding but then any further changes should look at it from a client’s point of view. Treating the clients fairly is now pursued by most regulators so I think those things need to be included, but I'm not sure NZQA is the right vehicle.”

He does think treating customers fairly, ESG, climate change reporting and AI as a supporting tool are useful for advisers to know about.

Also risk management and how to explain value to clients. “That’s where I think the NZQA may not be flexible enough because things are quite fast moving and I wonder whether or not we need a separate quality assurance exam that sits aside the umbrella of the code”