GRADUATES

Graduates

Career structure

First steps

The City watchdog, the Financial Services Authority regulates the provision of financial advice in the UK. You cannot simply set up a financial advice office when you want to, start trading and be authorised by the Financial Services Authority from day one. There are rules and regulations contained within the Financial Services Authority

Rule book called Training and Competency Requirements that require a rigorous training and examination structure to be in place for all financial advisers.

The place to start

The Chartered Insurance Institute has produced a comprehensive route map into financial services and developing a career as an IFA. Look at www.pathways.cii.co.uk; it's the CII's resource for new recruits in the financial services industry.

Types of IFA

You can apply to become an Appointed Representative of a Network. These are groups of smaller IFA firms who share business support functions and are contracted to work within the Networks rules (the Network takes responsibility for the quality of your work and therefore has procedures in place to check it meets their standards). Each IFA firm has its own identity/brand, but saves costs by sharing services with other IFAs.

A firm that requires its IFAs to use one brand is called a National IFA. Often, IFAs will be employed by the National IFA they work for and receive a salary. You can go it alone and seek direct authorisation with the FSA. This is achievable only after having gained experience in the financial services market, usually at least three years. You have to provide all your own business support functions e.g. compliance, IT, research and training and competency services and ensure you keep track of all regulatory requirements.

Many successful IFAs may have at some time been a member of a network or have used the services of a network, as everything is under one roof.

Where can experience be gained to provide a good grounding in financial services?

There are a different ways to start your training as an IFA.

Many people start off as an IFA by becoming employed by an existing IFA firm as a Para planner - someone who provides admin support for an IFA.

This gives time to study the industry exams, understand the terminology, procedures and processes and skills, and get to know what clients are like and what their expectations are.

Product provider companies and banks can be a good learning ground. Many people working for product providers in technical or advice roles move onto becoming an IFA after learning their trade.

Some people start by becoming a Mortgage Intermediary. Entering by this route means developing skills in one need area (financing a property) but, they get a good feel for the industry and learning the generic skills required.

There is talk amongst some IFA firms to create Academies to nurture new blood into the IFA profession.

What can an IFA expect to earn?

Those with entrepreneurial flair can quickly build an independent advisory firm of quality with a financial return to match. Your earnings will depend on your clients' wealth, their confidence in you, your expertise and experience, your effort etc, but to get a rough guide look at the Job Search in the careers section of our website or the adverts in the trade press eg. Money Marketing and Financial Adviser.

How do IFAs earn their living?

There are three main ways in which IFAs earn money.

  1. Fees - all IFAs offer their clients the opportunity to pay a fee for their service e.g. an hourly rate.
  2. Commission - IFAs can also accept from the provider a percentage of the premium their client invests with or pays to them.
  3. Combination - a mixture of the above (even for the same client).

When you first start working with a client you have to provide a menu of charges explaining how you or your IFA firm will be paid. IFAs must offer clients a fee option that gives clients a choice whereas other types of financial adviser do not need to.

So you want to be an IFA?

If it all sounds good and you’re prepared for some hard work, here are some final things to think about to achieve that perfect career.

A checklist of what you need to do:

  • Speak to other IFAs about their own experience. You will be surprised how much helpful advice you will receive. Contact IFAs through www.unbiased.co.uk if you do not know any, you may have to pay for their time but this will be well worth the money.
  • Feel comfortable with the level of responsibility you have towards your clients and to the FSA - you need to be technically proficient and to be able to follow rules!
  • Appreciate the amount of work that is involved! You will have to knuckle down to Continuous Professional Development throughout your career.
  • Gain experience in an IFA firm - accepting you may have to work through the ranks will give you the breadth of experience and exposure to the right environment.
  • Obtain the necessary qualifications such as the Certificate in Financial Planning - you don’t have to working in financial services to do them (although it does help) and success may help you secure a position within an IFA firm.
  • Check out what it takes to start a business - to be self-employed www.hmrc.gov.uk/selfemployed or set up your own company www.hmrc.gov.uk/employers/index.shtml.
  • When you start to offer advice, make sure you always have sufficient Professional Indemnity Insurance in place. This will protect your client accepts your advice and it proves to be mistaken or ill advised.
  • Think about where you want to be in five years time - it will help you make the right choices now.
  • In order to keep up to speed with industry events, for further study and to network with other IFAs - join professional organisations such as the Personal Finance Society, part of the Chartered Insurance Institute, at www.pfs.co.uk, the Institute of Financial Planning www.financialplanning.org.uk or the ifs School of Finance www.ifslearning.ac.uk
  • Make sure the organisation you join is a member of AIFA. We are the voice of the IFA profession and talk to the regulators and policy making bodies on behalf of the IFA community. It is AIFA’s role to ensure light touch and proportionate regulation.

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