First check the adviser

As the regulators press on with cleaning up the financial services industry, advisers are taking examinations in droves, and new qualifications are being dished out by the skip load.

Unfortunately, the general public - whose interests this furious activity is supposed to protect - have little idea what all those pips on shoulders really mean.

Come July 1997, anyone giving advice of any kind on investments, or investment-related products such as endowment and most insurance policies, must have a "benchmark" level of technical expertise.

In most cases this will be the three basic stages of the Financial Planning Certificate, or FPC. The FPC syllabus and examinations come through the Chartered Insurance Institute (CII). But not having an FPC3 qualification is all right as long as an adviser holds CeFA, the Certificate for Financial Advisers, run by the Chartered Institute of Bankers, the Initial Test of Competence (ITC) from the Institute of Chartered Accountants, or IAC, the Investment Advice Certificate, from the Securities Institute.

Will Hastings, at the Personal Investment Authority (PIA), the industry's regulator, says: "There will be no amnesty or `grandfathering' [exemptions for those over a certain age, or who have spent a set number of years in the industry]. If you have not qualified by 1 July you cannot give advice; simple as that."

Today's tough regime is a far cry from the days when any salesman who could walk and talk could go out and sell. The aim is to avoid repeating the scandals of the past.

A recent NOP survey found that nine out of 10 people want specific advice before buying a pension or investment product. So what level of expertise should anyone expect from a financial adviser?

Kate Gill, chief executive of the Institute of Financial Planning, says: "First of all, the public needs to judge when particular expertise is necessary, or just an optional extra. For example, it would be ridiculous for a self-employed man to hire City accountants like KPMG to help him put pounds 20 a month into a personal pension scheme." But, if you want to set up a self-administered company pension scheme, things are very different.

Basic examinations do not equal comprehensive expertise. But more knowledge does serve to highlight to advisers when they are out of their depth. A good example is the potential bankruptcy of a client - very few insurance or investment advisers should be dealing with it, but, if they can at least recognise the signs, the case can swiftly be passed on to a specialist in insolvency.

The basic FPC (or one of its three equivalents) qualifies an adviser to "conduct a fact-find, and, in the light of information collected, assess the client's needs and recommend appropriate financial products to meet them". Passing the mandatory exams confers a certain expertise upon advisers, but they do not get any letters after their name unless they belong to a body such as the Life Insurance Association. Passing FPC3 entitles a member to use the suffix MLIA(Dip). The "(Dip)" is important, as it signifies success by examination. Without it, the letters mean little more than payment of a subscription.

To earn the right to call oneself a member of the Society of Financial Advisers (MSFA), or an associate of the LIA, an adviser needs to pass more highbrow papers under the Advanced Financial Planning Certificate.

How enthusiastic insurance salesmen will be to have the letters ALIA after their names remains to be seen, but the Chartered Insurance Institute believes advisers will warm to the new culture. In time, the goal is to create a true "chartered" title.

Steve Radford, a CII spokesman, says: "The designation of `advanced' says to the customer that this person is committed to a professional career rather than being just a journeyman adviser."

Top of the financial advice tree are the 60 or so Fellows of the Institute of Financial Planning (FIFP) - often accountants - who are qualified to deal with the most rarefied financial subjects. IFP members charge a fee rather than being paid by commission.

For most of us, who just want to buy a Pep or insure ourselves against a heart attack, the biggest problem is finding a good basic independent adviser at all. IFA Promotions, which promotes independent financial advice, runs a hot line (0117 971 1177) to provide a selection of IFAs where you live or work.

The Money Management Register (0117-976 9444) concentrates on those who charge fees rather than take commissions.

Especially until the end of June, the advice is to ask any prospective adviser to prove what levels of qualification he or she has achieved before transacting any business.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk