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Thinking of becoming an IFA
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# 1
hobbesandco
Old 30-01-2006, 7:36 PM
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Default Thinking of becoming an IFA

Not sure if this was the best board to use but I thought a lot of IFAs go on here so it was worth a try.

Anyways, I am thinking of jacking my career in IT and working towards becoming an IFA. This isn't a spontaneous, whirlwind decision. I have been thinking of it for some time and I do read finance websites, magazines and books on a regular basis. I just figure why not get paid for something I do anyways? I know doing it professionally is quite a big step but I think it may be something I would enjoy.

I have looked at the FCP (or CFP) website to have a look at the certification. Does anyone have any advice? Is this a certification and career worth pursuing? Is it an easy industry to enter? Are there any jobs in the Midlands? Is it easy joining an IFA firm as opposed to banks?

Sorry about the questions but I would like to do as much research as I can before changing career. And I'm happy to have this post moved if it belongs in a better place.

Thankyou
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# 2
dunstonh
Old 30-01-2006, 8:58 PM
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Quote:
Is it an easy industry to enter?
Not as much as it used to be. Going straight to IFA is virtually unheard of nowadays. You would be looking at a path that would take a couple of years to get there.

Quote:
Is it easy joining an IFA firm as opposed to banks?
Without qualifications or experience at any level, you are unlikely to get in with an IFA firm. Even if you did, it would be at mortgage level or general insurance level.

General insurance and mortgage exams are not that hard and a bit of self teaching could get you those exams and it would make it easier for you to get a placement with an IFA firm. However, they would be unlikely to fund your training and qualifications to the required level. You would also have to prove competent at the GB and mortgage levels first.

Banks are far easier in that respect plus there is less cost on you. Even there you could still do with 2 years experience with a bank as a tied agent before going IFA. You don't learn the job by passing exams. That just allows you sit in front of clients. After you pass the exams, thats when the learning begins. Best you make your mistakes and learn the job in front of bank customers. It doesn't cost you anything, a future complaint won't be a problem for you and most bank advisors are low knowledge and skilled so you won't feel out of place. Just don't let them brainwash you.

http://www.cii.co.uk/cii.aspx is the website for the qualifications needed.

I would say go with a bank for the exams. Do your 2-3 years with them. After that, if you realise how crap a bank really is, then you should do well as an IFA. If you think that banks are better than IFAs at that point, you have been brainwashed and turned into a salesman and entered a comfort zone that would see it hard for you to survive as an IFA.

Starting the job with an IFA firm would be the harder route plus you wouldnt get the exams passed as quickly as a bank.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 3
hobbesandco
Old 30-01-2006, 10:09 PM
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Thanks for your reply dunstonh. What I am thinking of doing is taking about 6 months to a year to take the exams. I notice on the cii website that there's a Personal Finance society with workshops and conferences. Is it worth joining in terms of networking? I'm thinking if I can meet people in the industry when I have passed 1 or 2 FCP exams should enable me to get my foot in the door.
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# 4
dunstonh
Old 30-01-2006, 10:43 PM
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I'm not up on the new qualifications required. The old one required FPC 1 before you could see protection clients and FPC2 before you could see investment clients. You then had to pass FPC3 within a defined timescale. It was a long time back but I think it was 12 months. The CII website should confirm that.

If you can get 1 & 2 (or the new equiv) then you should find an IFA firm is more willing to consider you. However, it would almost certainly be only on mortgage and protection terms to start with.

Remember that the minute you are an advisor, you have a 2000 a year levy to pay and there will be PI costs. Another 1k average there per year. Either these are going to be passed to you in some form or you need to go down the tied route. Trying to run before you can walk will be costly. Without a client bank and experience, you are not going to find many IFA companies, i would think, that would look at you in a straight to IFA role. Not only that, who would pay the supervisory costs? You are looking at joint appointments with a supervisor for a number of weeks. If the employer thinks it's worthwhile, they may do it. Otherwise you may find yourself having to do it in addition to another role.

Don't let me put you off. It's just that straight to IFA is going to be very hard and unrealistic. It could also be very risky for you. Did you know that a self employed IFA has a personal lifetime financial liability for the advice given? A tied agent doesn't.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 5
Titan
Old 31-01-2006, 10:04 PM
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I would think it is very optimistic to get full IFA qualification in 6-12 months, the exams are every 3 months, and there are more than 2 exams to get there... they just changed it all and now there are all sorts of FP this and FP that!

I'm lucky that my employer pays part of my exams, well, only the FP1 and FA2 exam, but I guess it makes sense as we only do SIPPs and WRAPs... pension stuff all (or almost all) of it.

Not wanting to burst your bubble, but just thought I'd let you know how the exams work

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# 6
hobbesandco
Old 01-02-2006, 7:42 PM
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I know the exams are once every 3 months but are the FP exams easy and could you do two exams in one session?

Also, if I chose to work in a bank would the sales targets be realistic or would I be flogging myself trying to sell their products to everyone?
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# 7
dunstonh
Old 01-02-2006, 8:42 PM
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Quote:
know the exams are once every 3 months but are the FP exams easy and could you do two exams in one session?
You would be looking at 2 weeks solid 6-7 hours a day for two weeks to pass FPC1 and FPC2 (or the new version). FPC3 is a lot harder than these and you are looking at 6-12 months ideally. Any quicker than that and you risk losing a lot of the knowledge or only know the answers but not the reasoning behind them.

Quote:
Also, if I chose to work in a bank would the sales targets be realistic or would I be flogging myself trying to sell their products to everyone?
From my experience, it depends on the branch you get. Good branch and you are laughing. Bad branch and you are doomed before you start. It is a sales evironment and remuneration and your job are dependent on sales. Different banks allow their advisors to have different levels of freedom. Even within the same banks, you get different levels. I wouldnt go back to a bank ever. The environment is sales sales sales, the products pretty poor and very expensive and the clients and you are a more of a salesman than an advisor. All that being said, they will give you free training, usually very good training to be fair and you come out the other end with an experience of banking which will remind you how much better being an IFA actually is.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 8
hobbesandco
Old 01-02-2006, 8:50 PM
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Is FPC3 the one about financial protection? FPC1 should be easy. It's about regulation and ethics (ie. there are none - just kidding!)

As for banks (and you don't need to mention names) how would I go about finding which ones were good and which ones were a joke. The reason I'm asking is because I used to work for a bank selling PPI and although we weren't really selling particularly hard you could tell it was getting that way. The work was really soul destroying in the end...My one big concern is that if I do find work in a bank, after 2 years I could be an expert on their products but not particularly on how to become a good IFA. Would I be any closer to becoming an IFA?
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# 9
dunstonh
Old 01-02-2006, 11:03 PM
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FPC1 (protection) and 2 (basic investment) were multiple choice. FPC3 is case studies and written answers. My FPC case studies were on inheritance tax and pension transfers. A bit !!!!ty really as I was with a bank at the time and they didnt do either of those as tied agents and didnt train us on it. Managed to get a pass though.

Quote:
My one big concern is that if I do find work in a bank, after 2 years I could be an expert on their products but not particularly on how to become a good IFA. Would I be any closer to becoming an IFA?
A heck of a lot closer than trying to do it directly yourself. I did 4 years of general insurance brokerage and 6 years of tied advisor (with a bank) before going IFA.

It takes years to learn what to do correctly. So, as you say you want to be a good IFA, rather than just an IFA, taking it in stages makes much more sense. Every week you learn new information if you want to. You would't make a good IFA if you do it too quickly.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 10
K9cuddles
Old 01-02-2006, 11:51 PM
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Well I'm sitting my CF1 and FA1 in april! All paid by employee!!! Plan to do CF2 and CF3 in July, CF4 and CF5 in Oct and maybe CF6 & CF& in Jan 07.

If you need a study partner let me know!!! How are you funding it all? I'm sure it's a case of needing experience once you pass though!!! I'm not planning to become a IFA though.. just want the knowledge under my belt!!!
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# 11
Deemy
Old 02-02-2006, 2:57 AM
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Yeh if your employers payign then do them....

Ibe toyed with the idea over several years but abandoned for now... since there are far, far too many IT certs to get through TOOOO MANY !

Last edited by Deemy; 02-02-2006 at 3:06 AM.
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# 12
EdInvestor
Old 02-02-2006, 7:11 PM
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Quote:
Originally Posted by hobbesandco
The work was really soul destroying in the end...
There seem to be quite a few people (not least the FSA) now saying that traditional IFAs might not be with us for much longer, for a number or reasons related to compliance and regulatory costs, retirement of many older IFAs and closure of their businesses, lack of capital for spending on business growth and investment, unsustainable business models which the insurance companies can't afford any more etc, etc.

Are you sure you wouldn't go through the training period and simply end up back where you started in a bank?
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# 13
Deemy
Old 02-02-2006, 8:34 PM
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Yhe, probably better off doing something like ACCA or CIMA more work but worth a hell of a lot more !
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# 14
dunstonh
Old 02-02-2006, 8:45 PM
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Quote:
Are you sure you wouldn't go through the training period and simply end up back where you started in a bank?
I know that was a question aimed at hobbesandco but I will respond from my point of view and say NEVER. Although I can say that from a standpoint that I am not reliant on up front commissions. If there was an instant change to fees tomorrow I would survive with no problem. I wouldn't want to be a start up business at that time though on a small scale. It would slowly kill off the local IFA. Which would be a shame as the local IFA is generally more compliant and gives better advice at lower cost to the consumer than the salesforces. The FSA seems to want to concentrate on what is easier for it to manage rather than what is best for the consumer. Only hope is that Conservatives get into power next time and go through with their comments on reducing the powers of the FSA. Even though Tony Blair has said similar, there is little chance of him doing anything to change it whilst Mr Gordon "I love red tape" Brown is around.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 15
Cook_County
Old 02-02-2006, 10:46 PM
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And my understanding was slightly different - I had thought that IFAs were going out of business because of severe lack of competition in the PI market leading to unaffordable but mandatory costs.

Not that you'd know thiis from reading MM and IA each week where job ads are still filling up several pages!
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# 16
dunstonh
Old 03-02-2006, 9:21 AM
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And my understanding was slightly different - I had thought that IFAs were going out of business because of severe lack of competition in the PI market leading to unaffordable but mandatory costs.
PI costs have eased back a bit in the last year. Mine is due in May. There is no indication that any increase is expected.

It certainly is a cost to consider. If you take the FSA/FSCS levies and the PI cover, you are looking at around 7000 a year for a single advisor owned business.
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
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# 17
EdInvestor
Old 03-02-2006, 11:25 AM
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THe FSCS levy has just gone up by c.25% I believe due to a hurge surge in, you've guessed it, endowment complaints.
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# 18
Dips
Old 08-06-2007, 5:28 PM
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I've got to do FP1, 2 and 3 sometime soon. I've got the text book for FP2 at the moment. Would it help to do FP1 before I do FP2? I'm thinking I might do FP2 in the first week of July and do FP1 at the end of July.

Any thoughts?
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# 19
chickencow
Old 09-06-2007, 4:26 PM
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I'm aiming to do the exact same thing as the OP - I'm currently working for Friends Provident who kindly pay for my revision material and exam fees (typically 150 per unit) for the Certificate in Financial Planning (CFP) after which I am aiming to go for the Diploma in Financial Planning. Also, the advantage of doing it through my employer is that the technical consultants periodically run revision seminars that you can attend in addition to them providing past papers etc.

The old FPC was criticised as the investment part was not substantial enough so the new CFP differs from the old FPC in that there are now 5 rather than 3 exams. If you currently have the old style FPC, you would need to sit CF2 to get the new qualification.

As for doing the exams in 12 months - this is certainly possible and is actually the target I am aiming for. For units 1,2 and 5 they reckon you need to do about 70 hours revision and about 40 for 3 and 4. I have done my CF1, am sitting my CF2 very shortly and then I am going to try and do CF3 and CF4 together.

The exams are multiple choice (with the exception of CF5) and are now done online at various exam centres. Because the exams are done online, there are now a lot more testing centres and the exams are much more regular (in Manchester there are about 3 per week!) so you can sit the exam when you feel ready, rather than on a set date at 3 month intervals.

It's definitely best to do CF1 before CF2 as the latter builds on the knowledge gleaned from the former. The new units are as follows (recommended revision times in brackets):

CF1 - UK Financial Services, Regulations & Ethics (60 hrs)
CF2 - Investment & Risk (70 hrs)
CF3 - Financial Protection (40hrs)
CF4 - Retirement Planning (40hrs)
CF5 - Integrated Financial Planning (70hrs)

Hope this helps a little!

CC
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# 20
Brum Man
Old 09-06-2007, 9:00 PM
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I've just completed Certificate in Financial Planning and I did them in the following order, CF1, followed by CF3 & CF4 then I did CF2 followed by CF5.

It didn't hinder me at all doing them out of sequence as they don't really build on each other at all, and certainly CF1 has no bearing on the others as far as I could tell! I found CF1 to be the most boring by far as it is really dry just reading about regulation as you can't really relate it to anything that you would have an interest in! The only one I would say leave until last is CF5 as you have to have the knowledge from all of them to be able to do it.

I think 12 months is a very realistic time frame to do them in, even more so now the exams for 1-4 are computerised and you can do them much more often. I did them when you could only sit them every 3 months and it as a pain in the bum!

I plan on starting Diploma level in October.

Last edited by Brum Man; 09-06-2007 at 10:04 PM.
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