IDEAL ADVICE

Increasing financial literacy of advisors

State of play The barriers to entry for operating as a financial advisor are surprisingly low in a number of European countries such that in these jurisdictions necessary qualifications can be obtained with little study and no practical experience, and often ongoing education is not compulsory. Recommendations • Minimum level of pre-education: we recommend that individuals must successfully complete a mandatory minimum level of pre- education (not number of study hours), equal in all European member states prior to their acceptance for financial advisor professional training. • In-depth theoretical and practical training: individuals satisfying this pre-condition should complete a European-wide standardised, rigorous, and in-depth theoretical training program consisting of cognitive and behavioural skills and ethical conduct modules. They should also complete a two-year job training program with a registered financial advisor or institution. • Certification matrix linked to sophistication of advised products: upon completion of this minimum training and certification, an additional certification matrix linking advice on more complicated products to a higher level of education and examination should be introduced. • Continuing education: advisors should be required to spend a specified number of hours of training every year to retain their license. We believe that the industry should further commit in improving the quality of advice as otherwise it will find itself confronted with increasing regulation and scrutiny as regulators move to ensure a higher customer protection.

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