Are CPD requirements driving up the cost of advice?

Speaking with ifa, managing director and financial adviser at Perspective Financial Services Esther Althaus argued that while it doesn’t necessarily have to cost money to access continuing professional development (CPD) content, it does cost her time, which inevitably impacts the cost to clients.

“If I wanted to, I could get all my CPD points for free. There’s plenty of opportunities where it doesn’t cost me. I can sit at my desk, get up at six o’clock in the morning for a month and get CPD points at no cost,” Althaus said.

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While she noted that it’s likely she would attend events such as conferences regardless of their contribution to her CPD requirements, the cost of which would likely still impact her clients; she argued that these optional activities are an investment in herself as a professional.

This is contrasted, she said, with other activities that serve no purpose other than fulfilling the requirements.

“I choose to invest in myself, and that’s whether those CPD points are required of me or not. I’m going to spend that money, and it will drive up the cost of advice to some degree, because I want to invest in myself and be a good adviser,” Althaus said.

“Some of that is just going to happen anyway if you’re somebody who has a mindset of ongoing investment in yourself as a professional, however, that’s the stuff that I elect to do.

“Then there’s stuff that I have to do on top of that, and that’s where the additional cost is, because it’s time. My time is money … It does add then to the cost of advice.”

Appearing on an episode of the ifa Show in September, Helen Baker, financial adviser and owner of On Your Own Two Feet, argued that while ongoing development was important, the current structure was inefficient, leading to many advisers completing an excessive amount of CPD hours while still struggling to meet the minimum requirements for each category.

“Obviously, we don’t want to be doing it to a point where we become incompetent, but I think advisers kind of know where they need to get their professional development hours up and learn, but some of those are quite rigid,” Baker said.

“I know one year I ended up doing like 70 hours of professional development because it wasn’t under that particular category or it crossed over, only part of it was on that category. So you’re doing bundles and bundles of hours on certain things that are not there. The cost is a big issue.”

Althaus shared a similar experience, stating that one year she had completed 90 hours of CPD, yet was still working to fulfil her CPD requirements.

CPD – just one more expense for advisers

Over recent years, the advice profession has been struggling under mounting operational costs despite government’s claims to want to bring down the cost for consumers, and CPD feels to some like one more expense to add to their ever-growing list.

“I don’t know how much they’ve thought through the consequences of some of the decisions that they’ve made, and the QAR is supposed to address some of the issues around the cost of advice and the cost to serve,” Althaus said.

“But at the end of the day, while we still have a lot of paperwork and additional CPD and … the fee that we have to pay for the wrongdoings of Dixon Advisory and all these things, everything drives up the cost of advice.”

Baker ventured that while there is some value in CPD, advisers’ time may be better spent with clients.

“Everybody wants to be at the top of their game, I get that, but all the time that we have to do all these hours and hours of professional development means that’s less hours in front of clients,” Baker said.

“It used to be about 20 when I started and now it’s 40, so it’s double. I just wonder whether things like that could also help to trim back and open up the time that advisers are available.”

Finally, Althaus noted the time consumed by onerous CPD requirements, reducing that which could be otherwise spent providing more clients with financial advice.

“At the end of the day, not everyone is going to be able to afford advice, that’s the bottom line, but the people who are getting advice need to get good advice, and the advisers just should have time to give advice. You know, it’s ridiculous,” she said.

“If you have a look at my diary, you’d think, how can I see so few people a week? If I was a doctor, I’d be seeing 10 times, if not more, people, but we’ve got all these onerous requirements – some are necessary, some could be done away with – I would have more time to actually give advice to people.”