One of the aims of the Retail Distribution Review (‘RDR’), was to improve professional standards by introducing a minimum level of qualification for all investment advisers. A key component of this was the introduction of a Continuing Professional Development (‘CPD’) requirement for retail investment advisers, to ensure they continue to meet the challenges and demands of the investment market. The ongoing CPD, which involves a minimum of 35 hours per year, provides advisers an opportunity to think about their development needs; the training and self-study that would most benefit them in delivering their day-to-day role.
You should focus on how you will achieve your learning objective, rather than simply consider which training courses are available
The FCA continues to receive questions regarding what should be included as part of a CPD plan. The rules and guidance about this are set out in section 2.1 of the FCA Training and Competence Sourcebook. In the first instance, questions about what is needed in individual cases can be directed to your Accredited Body. These bodies will be responsible for verifying compliance with our CPD requirements in order to issue individual Statements of Professional Standings (‘SPSs’). However, it may be worth re-capping our general expectations around what should be included in a CPD plan:
- identification of your learning needs;
- identification of the best available method to fill those learning needs;
- participation and a record of the learning activities;
- reflection upon and a record of the outcome of the activities; and
- suitable record keeping, which allows you to demonstrate adequately the above to your Accredited Body.
Overall, it is important to emphasise that CPD plans should be relevant to the professional development of both your current and future role. Each CPD plan will be unique, having been tailored to your personal circumstances. In order to ensure this is as useful and personalised as possible, you need to take responsibility to identify development needs and learning objectives. This will allow you to select the most appropriate form of learning to address the identified gaps.
You should focus on how you will achieve your learning objective, rather than simply consider which training courses are available. Nor should advisers wait until the end of the year and fit in the most convenient course. All study should be chosen on the basis that it is relevant to what you have already determined are learning needs that you wish to address.
The FCA Guidance does provide a degree of flexibility in how professional development is carried out – including options for parts of this learning to be in the form of self-study. However, it is important that portions of your CPD are structured and capable of being independently verified by both your firm and your Accredited Body. FCA Guidance in the Training and Competence section of the Handbook (TC 2.1.16G) specifies that out of the 35 hours of CPD, at least 21 hours should be structured learning (i.e. not self-study). Even within structured CPD, there are a variety of means by which you can demonstrate you have fulfilled the requirement of ongoing learning. Examples of structured CPD activities include participating in courses, seminars, lectures, conferences, workshops, web-based seminars or e-learning.
You are encouraged to be proactive and realistic in identifying learning needs and you should select useful means to address these when carrying out your day-to-day tasks. The case study below provides an example of identifying learning needs in relation to advising on newly launched products or funds.
Case study – potential CPD needs:
One example of potential CPD needs is when new funds or products are launched. If you will be recommending them to clients or including them in portfolios then you will need to understand the investment. The amount of CPD you may wish to undertake is likely to depend on your circumstances as an adviser/investment manager, and your existing knowledge of the provider of the investment and the nature of the underlying assets.
Clearly, if you do not understand adequately the essential nature of the investment, its benefits and risks, then you should ask the provider to supply additional information or training. Of course, you should not rely entirely on the marketing material provided. Factual information such as the asset allocation and underlying holdings can be taken as read but opinion – such as the level of risk – cannot be relied upon. You need to come to your own view on these issues, and in order to do so you will need to understand the investment well.
This may lead to a need for CPD in the nature of the underlying assets and the structure of the investment along with other relevant issues such as the counterparties, liquidity position etc. as is needed for you to understand the investment. If you feel you already know enough about these issues then you may be able to come to a view on the investment without additional CPD. However, if the investment involves assets or structures which you are less familiar with, or you need an update or refresher, then undertaking CPD should be considered.
The example above focuses on CPD and identifying learning needs when you are advising on investments. However, as always, when providing advice, you should also consider the nature of the investment and how it fits with the client’s needs and risk appetite, and any other requirements in order to ascertain suitability and discharge your duties as an advisor as well as what impact the selection of a given provider could have on the customer in terms of charges or the financial strength of the provider.