How to become an IFA

skaff

Hi all

I am currently in the Army (on tour in Afghan at the moment!) and after years of giving out free (and usually good!) financial advice it occurred to me that i am missing a trick here!!

How do you go about becoming an IFA? What qualifications do i have to get and would you advise that i work for a company first to cut my teeth or just dive in on my own.

I know that there are a few IFAs on this board so your advice would be much appreciated! In return if you are ever in Afghanistan......;)

homer_j_3

you need to get your qualiications which you can get from

http://www.ifslearning.ac.uk/qualifications/courses/index.cfm

or

http://www.cii.co.uk/financialservices/qualifications/Qualification.aspx?award=CertFP

You may be able to join a company after getting your first paper done and start as a trainee financial planner/adviser. Once you have all the qualifications (Cefa 1-3 or CF1-5, I think is the minimum) you are qualified as a financial adviser. You will find it extremely hard to become an IFA straight away due to the costs of insurance and regulations, so you will need to work as a tied or multi tied adviser to start off with and build your experience up this way.

A lot of banks will take the right candidates on and pay for the qualifications but I would recommend doing the first paper on your own back to make sure you can do the study and prove to employers that you are prepared to do it.

dunstonh

Whilst Cefa 1-3 or CF1-5 gets you the basic qualifications to be a financial adviser under the current rules, they will not be enough from next year. The FSA has proposed (and the industry is quite happy with accepting) higher qualifications for IFAs from next year (although a transition period will exist for existing IFAs). The diploma level will be needed so 4 more CII exams which are more specialist than the certificate level.

Also under the proposals the only type of adviser will be IFAs. The other types (tied and multi-tied) will not be able to use the title "adviser" and will not be able to give financial advice. However, they will still need certificate level and will be referred to as insurance agents, salesman or representatives.

It is expected that one the consequences of the "RDR" changes is that it will be virtually impossible to go straight to IFA. It is already difficult and to be honest to try it is daft because it takes a good year or two for the basics of certificate level to sink in let alone the diploma level exams.

and after years of giving out free (and usually good!) financial advice it occurred to me that i am missing a trick here!!

With respect, I doubt the financial advice you may have given is anyway near the quality or with the understanding that IFAs have to give out frequently. There are simple transactions which common sense and a bit of reading can get you through the basics (some of the areas Martin covers highlight the simplicity but even then there are things missing). However, IFAs are increasingly focusing on the top end of the business and that brings more complicated products and options as well as limits, law and tax into the equation.

would you advise that i work for a company first to cut my teeth or just dive in on my own.

No-one will touch you on owner basis without having at least one years financial services experience and having obtained competent adviser status. Remember as owner/partner/director you will have FSA control functions for being an adviser and holding a decision making role for the company. An employee just has adviser control functions and the employer takes on the legal liability instead of you or your network.

The typical career route to IFA nowadays is

a) become a mortgage adviser with a local IFA firm (usually means passing the CeMap exams first)
b) or joining a bank as a mortgage adviser (they will help you through the exams although already having them helps your job prospects
c) join a salesforce without qualifications and they will train you. Although they usually put a financial debt on you for this which you usually have to repay when you start earning. The banks dont normally but then they are looking for salespeople. If you have a sales background they often consider you without exams or if the recruiter feels you have some sales skills that will help.

After doing a couple of years as a mortgage adviser and/or 3-5 years as a tied agent, you can then look to take the further exams to be an IFA. You are looking at about £500 per exam (including training material etc) These you will have to pay yourself. Most IFA firms are small local firms. There are some salesforces on the IFA side and most decent IFAs frown on these but some thrive on a sales way of doing things with targets, incentives and league tables. Some of the salesforces will taken you on at a lower level, train you up and throw you to the lions and then when you fail (which most do) they will come after you for the costs of the training. They will show you their success stories of the ones earning big money (by salesforce standards) but they are a minority.

So, the exams are:
Cemap 1, 2 & 3 (for mortgages - whilst increasingly IFAs are dropping mortgages or employing their own mortgage advisers, a new IFA would need mortgage business as they cannot be picky)
CII CF1,2,3,4 & 5 - certificate level
CII J0x (x indicating you can chose any 4 from that level to focus on your areas of speciality) - diploma level
longer term, chartered status may become necessary so that will be more exams but that is not proposed at this time but something you should aim for.

I only mention the CII levels there as the CEFA only does to certificate and around 90% of those taking the exams sit the CII versions.

Over half of new advisers fail and leave the profession within two years. Most common reason is unable to earn enough. Cause is due to lack of clients. Most of these leave in debt because they hold on too long before deciding to let go (or before they are pushed)
The top 20% do 80% of the business. So, dont be taken in by salesforces telling you what the top earners get as an example of what you can get.

So, a lot of negatives in there. However, it is a great career to undertake and if you succeed at it then the earnings should see you at 6 digit level. The problem is trying to jump to IFA in one go.

geoffky

There used to be loads on here until the credit crunch and then they started to say the work was drying up and all they were doing was little bits of work. so check out if you will be needed..

dunstonh

geoffky wrote: »

There used to be loads on here until the credit crunch and then they started to say the work was drying up and all they were doing was little bits of work. so check out if you will be needed..

There has never been loads on here. There are two, possibly three active at the moment and I can only think of 2 or 3 others that used to be active that no longer post.

skaff

Thank you all for your extensive and honest advice. For the record my 'good advice' was at the most basic level and i fully understand that it in no way related to true financial advice. The point i was trying to make was that it was something that interested me rather than thinking myself up to the job already!!

As to the comment on the crunch affecting work prospects, am i being naive here or would a shaky market increase the need for sound financial advice rather then reduce it??

A question that has come up from your tips is that of mortgage advisor v IFA. Would it be possible to qualify as a mortgage advisor and then complete IFA exams later? I have been given the option to shadow an IFA on the mortgage side in the past but work commitments prevented that taking place. At the end of my tour i may have the time to do this. Would you advise this route?

Thanks to all of you once again.

skaff

Me again

Looking at CeMap 1,2 and 3 there appears to be more companies offerring the tuition than there are people looking for mortgages!

Does anyone have any recommendations on which are best? Can you really learn effectively via home study or is it best to pay the money and get yourself into a classroom? And do you recommend any particular company/organsation?

As always, your help is appreciated!

dunstonh

As to the comment on the crunch affecting work prospects, am i being naive here or would a shaky market increase the need for sound financial advice rather then reduce it??

I think Geoffky was mistaking mortgage advisers and IFAs as being the same thing. Most of the IFAs I know have never been busier. Even my mortgage adviser is just as busy as normal (indeed, he is on track to earn more than last year). IFAs are primarily investment advisers. The mortgage advice is an addon or an alternative.

Would it be possible to qualify as a mortgage advisor and then complete IFA exams later?

Its a good way to do it. Indeed, it is one the of the typical career paths nowadays. It allows you to take bits in stages.

I have been given the option to shadow an IFA on the mortgage side in the past but work commitments prevented that taking place. At the end of my tour i may have the time to do this. Would you advise this route?

Very much so. You can do the mortgage side and earn some money whilst learning what its like to be an IFA whilst you sit the 9 exams required to get you there (post RDR).

Looking at CeMap 1,2 and 3 there appears to be more companies offerring the tuition than there are people looking for mortgages!

There are too many mortgage advisers and these companies have sprouted up over the last few years. Some are good but some can promise the earth but fail to deliver.

Can you really learn effectively via home study or is it best to pay the money and get yourself into a classroom?

Get used to sitting them at home. Its not easy but the hardest exams you still do will be self study.

skaff

Thanks for that. I am not put off by self study but i know that learning at home is only as good as the material provided. With so many around it is dificult to pick the wheat from the chaff. If anyone has any recommendations on quality organisations that would be great.

I will chase up my IFA shadowing offer when i return to the UK. It made sense to me to get some hands on as i believe it is the best way to learn. It's one thing to be a people person but another thing altogether in having something worthwhile to say to them!

homer_j_3

It may help if you say where you are from and then people may know of options around you?

skaff

I take it 'Helmand Province' wasn't the answer you were looking for!!:D

Seriously though, i am a Londoner originally but currently live in Ipswich where i have been for the past 12 years.