Optional Pathways to Full Licence


Financial advisers exploring a loophole to avoid sitting the Level 5 exam may be making a poor choice by relying on an apparent ‘get out of jail’ card in the Code of Professional Conduct.

One section of the code states that “…If a person seeks to demonstrate competence, knowledge, and skill by reference to an alternative qualification or experience, they should do so in an objective, measurable and independently verifiable manner”.

However, financial adviser advocate and industry contractor Melanie Purdey says she’d be “dismayed” to think anyone who is committed to practicing professionally as a financial adviser would seek to avoid completing the qualification.

“It is rudimentary in its coverage of aspects of the regulation, advice processes, and specific advice genres,” she says.

Melanie Purdey, Head of Aligned Advice, AIA New Zealand.
Melanie Purdey, financial adviser advocate and industry contractor.

“My concern is that some advisers sitting on books that provide renewal income alone may not realise that their current review obligations under the new regulations require the same level of knowledge as new business, and they therefore fail to see the ‘what’s in it for me’ to gaining the qualification.

“The proviso to this might be where one has a specific recent degree or qualification such as a New Zealand qualification in financial planning that would possibly capture many of the aspects of the NZFSC.”

Purdey says the challenge for most tenured advisers seeking to bypass or demonstrate Level 5 content would probably lay in record keeping “…how easily can you get your hands on qualifications and certificates from learning providers, many of whom may not even be in existence today?”.

“If one is relying on provider training, experience, and industry qualifications going back over 30 years this could be problematic,” she says. “And then one would have to be realistic as to their measurability, objectivity, and independence – particularly provider training.”

Successfully completing the Level 5 qualification can take as little as a few weeks full-time or a few months part-time to complete, says Purdey.

“The greater challenge is how easily it will be for new entrants to the industry to gain an acceptable qualification and earn an income at the same time,” she says. “This at the moment could provide an impediment to newcomers.”

Angus Dale-Jones, Chair of the Financial Advice Code Committee, says the code does not restrict the ways in which a person may demonstrate their competence, knowledge, and skill.

“That non-exhaustive, open-ended approach is in line with the legislation, and effectively allows for innovation and a wide range of business models,” he says.

Angus Dale-Jones
Angus Dale-Jones, Chair of the Financial Advice Code Committee.

“What the code does do is set the standard, and some of the ways in which that standard can be met, the most straightforward being to hold version 1 or 2 of the NZ Certificate in Financial Services (Level 5).”

However, Dale-Jones says that if a person chooses to adopt a different way (a way not listed in the code) to demonstrate they comply with the standard, they need, “…to convince a training provider to recognise their experience”.

He says: “The reality for many long-standing advisers is that in order to demonstrate their experience in an objective, measurable and independently verifiable manner they have to go through a process of collecting evidence to support it.

“Some may decide that for them the simpler approach is to sit the Level 5 test and prove their competence, knowledge, and skill that way. I would encourage advisers without Level 5 to speak to a training provider or assessor to explore the options available to them.”