Becoming a Pension Advisor

astreix

I work in banking (over 15 years experience) and understand even fairly complicated financial products very well.

I would like to become a qualified pensions advisor - it would allow me to offer free pension advise for people who cannot pay (possible working with a charity in my freetime). It seems to me that for people who have small pots or limited means there are not many economical ways to get pension advise.

This will allow me to use my skills and do something useful in my freetime.

As I work full time is it possible to get an advisor qualification based on self study? Also any indication of the cost of getting such a qualification if I self study?

dunstonh

it would allow me to offer free pension advise for people who cannot pay (possible working with a charity in my freetime).

Is there a charity that is willing to pay for all that and carry the liability for what you are doing?

The liability could push the charity under. Professional firms have been closing because their liability got too great. I am not aware of any charities that do what you propose.

It seems to me that for people who have small pots or limited means there are not many economical ways to get pension advise.

It depends on what you mean by small. Whilst a lot of IFA firms will prefer to focus on high net worth clients, there are still plenty that deal with the mainstream consumer. It is really only the real tiny stuff that is excluded from advice nowadays.

As I work full time is it possible to get an advisor qualification based on self study? Also any indication of the cost of getting such a qualification if I self study?

It largely depends on your ability to self learn. You are looking at a minimum of 6 examinations at level 4 standard. The study material for each will be around £150. If you want assistance in training courses then around £1000 each.

It seems you have good intentions but I suspect the commercial reality of what you want to do makes it a non-starter. There are a number of practical issues as well. You work full time. So, if the FCA say that they want to come out and see you for three days as an inspection, how would that fit in with your work? You have to maintain CPD. So, if a seminar with 5 hours CPD was available, would you be able to attend? When would you see the people and carry out the meetings (which would usually be multiple meetings of a number of hours each)? The other day I started a case just after 8am and was still working on it gone midnight. How does that fit with your working life? You wouldnt able to go directly authorised but would need a network. So, that is going to involve going away on a course as well as having periodic visits in the year and attending meetings. As well as extra costs with software, research companies etc etc.

You just don't see people doing the role split with another job any more. So, nice idea but really unworkable in reality.

zagfles

Good on you for volunteering, it's very rewarding.

Have a look at one of the tax charities eg LITRG or TaxAid, they are likely to need volunteers who understand pensions. Their main purpose is to help people with tax and tax credits etc but they'd be likely to need pension specialists, especially since the main difference between pensions and other investments is tax. It's worth looking into.

http://www.litrg.org.uk/about-us/becoming-volunteer

Or ask at your local Citizen's Advice Bureau.

I'm sure one of them would be able to point you in the right direction even if they don't need you themselves.

System

I think you should look at the trade union sector. I was a member of the national executive of a trade union for many years and as union reps are not IFAs, they are very limited in the advice that they can give.

A trade union may be willing to take the punt and support you through your studies if you are willing to put some work in for them at the end of it as a pension consultant.

The_Doc

A year ago I got made redundant after working 26 years in financial services. I took 6 months to chill out and then decided to start this:

Diploma in Regulated Financial Planning from the Chartered Insurance Institute.

You can see the costs from the website (about £250 per exam and there are 6, but can be less or more with different training options).

A similar qualification is available from IFP (Institute Financial Planning), My redundancy coach put me in contact with an IFA who said the CII qualification is more mathematical than the IFP one. That's why I chose it.

I have passed R01, R02 and R03 so far, all within the last 5 months and while also back working full-time as a contractor. I am currently doing R04 (Pensions and Retirement Planning). My intention was to consider providing financial advice/guidance or whatever in the same way you said at the beginning of your post. I find the subject interesting and personally useful, so even if I decide against the IFA route, the knowledge I will have gained will mean I don't need to consult an IFA for advice (unless I wanted to transfer my DB to a DC) and will thus be money well spent.

My mind is still open on my future plans. I don't want to work full time any more (am 54), so being a full-time IFA, starting on low rung of ladder, earning less than I would contracting, does not appeal. But potentially providing advice/guidance to those who can't afford it.

One tip I was given for for me to think nearer full qualification, was to contact Pensions Advisory Service to see if they had any roles available.

Hope that helps and best of luck.

TheTracker

dunstonh wrote: »

Is there a charity that is willing to pay for all that and carry the liability for what you are doing?

The liability could push the charity under. Professional firms have been closing because their liability got too great. I am not aware of any charities that do what you propose.

It would be interesting to understand the business model of financial advise. Or described differently, where each pound of every £100 from a client goes. We readers hear gripes of this burden of regulation and liability protection, but is the end cost £10 in every £100 or more like £40? Understanding that could help in the OPs situation to work out a minimum charge.

And for that contribution, where does it go? I expect a certain % goes back to clients in the form of compensation. But is that % around 25% or 75%. No idea as a bystander.

dunstonh

TheTracker wrote: »

It would be interesting to understand the business model of financial advise. Or described differently, where each pound of every £100 from a client goes. We readers hear gripes of this burden of regulation and liability protection, but is the end cost £10 in every £100 or more like £40? Understanding that could help in the OPs situation to work out a minimum charge.

And for that contribution, where does it go? I expect a certain % goes back to clients in the form of compensation. But is that % around 25% or 75%. No idea as a bystander.

It is difficult to say as different models have different costs. So, I could understate a firm with an office and office staff. Also, these things tend to have economies of scale. IFAs pay a lot of money monthly for software licences. The first licence (user) is usually the highest with additional licences much cheaper.

it is very easy for software to end up being one of your major costs. The FCA, FOS, FSCS, MAS, Pensionwise etc levies do give it a run for its money.

The OP would almost certainly need a network as being directly authorised will not be an option (due to no experience). The network would have a minimum charge. Likely to be around £5k a year. Software likely to be another £5k a year for single user. Liability insurance for single, no experience adviser with low turnover around £3k a year.

Probably looking at costs of around £15k a year as a single adviser before you do any business. As you do business, then you will lose proportions of that as networks, the FCA, FOS, FSCS etc all charge on percentage basis.

so even if I decide against the IFA route, the knowledge I will have gained will mean I don't need to consult an IFA for advice (unless I wanted to transfer my DB to a DC) and will thus be money well spent.

Its useful but it is like any other qualification. Most of it will not start to make sense until you are in the real world and you are putting that knowledge to use. You study to pass an exam. Retention of knowledge improves as you use it. I remember the first exams I took in the 90s. Two years after that was when I reckon that I really started to understand.

I think you should look at the trade union sector. I was a member of the national executive of a trade union for many years and as union reps are not IFAs, they are very limited in the advice that they can give.

Most of them have pulled out with RDR. Their product ranges were dire and the products largely obsolete and expensive. The Unions got a cut of the commission. It was run like insurance agents of old. Somewhat ironic that unions were ripping off their members that way.

That role suffered high turnover of reps as they would drive all over the country for mostly evening calls in an attempt to sell a product to help them earn. There are still some around who have attempted to make it work post RDR but it is a really really horrible way to work.