Old Mutual upbeat about financial adviser exams
ASSURANCE group Old Mutual has said it is confident that its mass retail business will mitigate most of the risks brought about by the Financial Services Board (FSB) regulatory examinations for financial advisers.
Old Mutual mass retail cluster MD Crispin Sonn said there was a risk of insurers losing people who did not pass the exam, with the ensuing risk of undermining sales and profitability.
“We’ve had more than 2 000 workers who have to write the exam before the end of June. Pass rates have improved consistently. By April, we were ahead of the industry average. However, I am reluctant to give exact numbers,” Mr Sonn said.
He said that last year Old Mutual was worried as only 10 out of 100 people who wrote the exam, passed. But that number had improved considerably. He said some people had had to write the exam more than five times and Old Mutual had had to be very active in helping them get through the exam, in terms of content and language.
“If your sales head count drops as a result of people having to exit because of the regulatory exams, you have a very serious sales and profitability issue. We think by June we would have mitigated 80% of the risks,” Mr Sonn said.
“The retail mass market in the industry would be pretty hard hit ... (But) we have bulked up on our adviser force by recruiting people who would have greater ease in exams and further development.
“We have grown our head count to beyond 3 500 tied agents.” Mr Sonn said this was an increase of about 13% growth in tied agents year on year versus last year.
One of the ways to mitigate the risks of a loss of staff and profitability was to recruit new entrants to the industry. Regulations allow new entrants two years to complete their exams.
Mr Sonn said the people the company was recruiting had a high likelihood of passing the exams. The company had also recruited people who had completed the exams.
The Old Mutual mass retail cluster has close to 2-million clients. The mitigation of the risks would help the mass retail unit sustain its sales and profitability, which were possibly threatened by a reduction of its head count.
The purpose of the FSB Financial Advisory and Intermediary Services Act examinations is to ensure there is a minimum standard within the industry.