Possible Hurdles

Over the last years very little has been done to support Financial Advisors on an ongoing basis with compliance fundamentals in South Africa.  A lot has been said about Financial Advisors but little has been done to educate and guide them through the regulatory maize so that could fully understand how to survive in the regulatory environment.  Unfortunately many Advisors see FAIS as a threat to their existence and the thought of them now having to write exams to keep their licences is even scarier

Many of these Key Individuals and Representatives  are over the age of 50 and last wrote exams when they left school or alternatively do not have the discipline of running a business and setting aside time to study.  The Financial Services Board has indicated that it has over 14 000 FSP’s registered with it.  This means a minimum number of 14 000 Key Individuals.  In addition to this industry sources say that there are approximately 100 000 Representatives offering advice and/or intermediary services to clients.

During this next year over 100 000 Advisors will need to study and write these Level 1 Regulatory Exams (RE).  Every year thereafter new entrants to our industry will need to also write the same exams.  Every three years thereafter 100 000 or more Advisors will need to obtain 30 to 60 CPD points to maintain their licences. This has created a plethora of training programs and workshops have been introduced to the financial services industry.  From 1 or 2 day workshops to  DVD’s, from Regulatory Guides to Inseta workbooks – Advisors are almost spoilt for choice.

All these come at a cost:

  • The cost of finding time to study .
  • The cost of attending a workshop.
  • The cost of buying study material.
  • The cost of travelling to a venue.

Theoretically the cost of writing this exam is not R900 per Representative or Key Individual as the FSB has pointed out.  It is the estimated study time multiplied by the hourly rate of the Advisor.  We believe the hidden cost preparing properly for these exams can be anything between R50 000 to R120 000 per Representative and Key Individual.  It is the estimated study time multiplied by the hourly rate of the Advisor.  Unfortunately no economic impact analysis has yet been done to  determine the cost of writing these exams to the financial services industry. R900 multiplied by 100 000 is a drop in the ocean!!

However the proof lies in the eating and Advisors will still need to study to pass these exams – come hell or high water.  There is no other choice!  Attending RE workshops is highly recommended but after everyone has attended the workshops and listened to DVD’s on FAIS – they still need to study for 80 to 120 hours before writing the exam.  Writing a multiple-choice exam in 1 or 2 hours when the learning material averages between 200 and 280 pages is not easy!  The mock RE results clearly indicated this fact.

We believe there is an alternative or an option to add a web-based modular RE learning system to help Advisors prepare for the RE’s and also qualify for the ongoing CPD requirements.  All this can be done in the Advisors’ own time without having to spend time travelling to- and attending a training workshop.

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