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Ever wondered what it takes to be a financial adviser? I never did! But combing through the writings related to personal finance, I continue to find a lack of Dutch focussed information out there for the general public. It was for this reason that I decided to have a look into the professional sources out there. While I am spending some time studying what I find there – I want to take this time to share with you what it takes to call yourself a financial adviser (in the Netherlands).
“When a person with money meets a person with experience, the one with experience ends up with the money and the one with money leaves with experience.”
– Warren Buffett
What makes a financial adviser?
Surprise! There is no Dutch law protecting the title of financial adviser (Dutch ‘financieel adviseur’), so anyone can call themselves one if they want. And you’ll find plenty of financial bloggers out there critical on financial advisers they’ve met (or heard about) in the past, sometimes even suggesting to never even think about approaching one. I don’t believe that last bit is sensible for big financial products, as these are worth getting financial advice about Luckily, just because anybody is allowed to call themselves financial adviser does not mean anybody can be out there selling you financial products.
In the world of financial products, you’ll find strict regulations, tightened even more after the economic pain caused by dubious banking practices in the first halve of this century. Apart from that any provider of financial services needs to have a license, which you can check online, anyone offering financial products also have a legal duty of care towards the customer (similar to a fiduciary responsibility, although not synonymous).
As a side note – for some reason, whenever a field is found out to not take care of their jobs in an ethical way, they seem to also introduce an oath to swear that the next generation will do good. In this way hoping to maintain their source of income. As a scientist, I had to swear an oath to make sure my scientific data is sound – which only got introduced after professors got found out that they would publish anything in order to get funding (interestingly, only fresh graduates had to make this oath, tenured professors had to make no such statements).
Similarly, the banking business introduced a banker’s oath after they took billions upon billions from their customers, only to take billions more from the tax payers (the same customers) to be bailed out during the economic crisis. Something in the line of ‘profits are private, losses are shared’.
Taking the banker’s oath makes you liable for disciplinary law, in this way to try and bring back the people’s faith in to the financial industry. They also took away certain incentives, such as commissions (on certain financial products), that made it very interesting for anyone to get into the financial industry for this reason.
What type of advisers are out there?
Just talking about financial advisers and leaving out any other variant of financial professionals (such as financial planners), you can have 9 different qualifications, where I would doubt to refer to 1 or 2 of them as qualifications for an advisory role as they are more aimed towards customer contact and/or administrative roles (the outer two in the figure below). These qualifications follow the requirements laid out in the Dutch Financial Supervision Act (Dutch: ‘Wet op het financieel toezicht’ or WFT).
Central in the qualifications are the different categories of financial products. With each category requiring a specific combination of legal credentials to provide advice or sell products in that specific category (see figure below). The most fundamental credential is the ‘basic’ module, required for every qualification – except for health insurances, which has its own fundamental credential. Some qualifications can also qualify an adviser for related topics, such as completing the insurance (for private individuals) module can also quality you to give advice on health insurance and the mortgage credit module also qualifies for consumer credit.
the purpose of personal finance, I would say that (besides the basics) wealth and mortgage credit together with perhaps income and insurance (for private individuals) are the most interesting – as they give all the necessary information (and qualifications). Insurance (for businesses) and pension plans are solely focussed on business finance.
What did I do with this new knowledge?
In my pursuit to provide you with the best possible information I can find, I have ‘infiltrated’ the financial industry, obtaining a basic qualification and gained access to the wealth and mortgage (incl. consumer) modules (no exam). I also took a banker’s oath. All in all, it’s been an interesting experience, but I would still refrain from calling myself a financial adviser.
Processing heavy fiscal and legal texts, next to learning all the calculations needed for proper financial management, has proven to be quite time consuming (next to everything else) – but eventually, I hope to bring this complicated material in understandable terms (and spreadsheets) to you, until then – if you’re wondering when’s the next post coming, know that I am working on quality for you!
As a last note, having processed quite a bit of knowledge in the last couple of weeks, a lot of material seemed like I should’ve known more about it. Besides the material being very technical (really could use some popular writing), I feel that it really is something that is missing at the basic curriculum for any high school student, or perhaps college student. Learning the (practical) basics about taxes, insurances and other financial basics from these certifications would’ve proven far more useful in life than the things I was taught in high school economics!
What do you think about your basic financial education? Did you learn about income taxes and the importance of proper insurances? Leave a comment below!