Two Sets of Requirements, One Candidate

Senior Managers who advise must satisfy two separate regimes at once.

The Senior Managers Regime

As a Senior Manager, the individual needs FCA approval before starting, assessed against the fit and proper test: honesty, integrity and reputation; competence and capability; and financial soundness. They sign a Statement of Responsibilities and are subject to the Senior Manager Conduct Rules and the Duty of Responsibility under the Senior Managers and Certification Regime.

The RDR Competence Standards

Anyone giving personal recommendations on retail investment products must meet the requirements in the FCA’s Training and Competence sourcebook. Since the Retail Distribution Review took effect at the end of 2012, that means holding an appropriate qualification at Level 4, such as the CISI Level 4 investment advice diploma, the CII Diploma in Regulated Financial Planning or the LIBF Diploma for Financial Advisers. Advisers must also hold a current Statement of Professional Standing from an accredited body and complete at least 35 hours of continuing professional development each year, at least 21 of them structured.

These requirements apply whatever the individual’s seniority. A managing director who advises clients needs the same qualification, SPS and CPD as any other adviser.

Which Senior Manager Functions Are Involved

• SMF3 Executive Director, the most common designation for directors of advice firms who also advise. Our article on SMF3 or SMF18 explains how to choose the right designation.
• SMF1 Chief Executive, where the chief executive or managing director continues to advise clients.
• SMF27 Partner, at advice and wealth firms structured as partnerships. See our SMF27 guide.
• SMF16 Compliance Oversight, occasionally held by a director who is also an adviser at smaller firms, although many firms prefer to keep compliance oversight separate from advice.

Why These Appointments Are Hard to Fill

A Narrow Candidate Pool

Many excellent advisers have never held a Senior Manager Function, and many experienced Senior Managers have never advised. Candidates who combine a current Level 4 qualification and SPS with management experience the regulator will accept are relatively scarce.

Lapsed Statements of Professional Standing

Some candidates hold the qualification but have allowed their SPS to lapse after moving into management. Without a current SPS, they can’t advise, and renewing it depends on meeting the CPD requirements. We check the status of both before introduction.

Consolidation

Consolidators acquiring advice firms often need directors who can run a regulated business, advise clients and integrate into a group, all at once. Demand for these candidates has grown with consolidation.

Succession

Many advice firms depend on founders who hold the key Senior Manager Functions and advise the most important clients. Succession means finding someone who can take on both the regulatory accountability and client relationships.

How We Run These Searches

1. Define both sides of the role. We agree the Senior Manager Function and Statement of Responsibilities, and the advice activities the individual will carry out, including any specialist areas.
2. Targeted, confidential search. We approach advisers with management experience and Senior Managers who still advise, discreetly.
3. Verify qualifications and SPS. We confirm the candidate’s appropriate qualification, check that their SPS is current with the issuing body, and review their CPD position.
4. Fit and proper pre-assessment. We check prior approvals and certifications on the FCA Register, regulatory history, directorships and financial soundness.
5. Shortlist and interview. Adrian Lawrence FCA interviews every shortlisted candidate, testing both management capability and advice credibility.
6. References and approval. We start regulatory references early and support the approval application.

What We Look For Beyond the Qualifications

Qualifications are the minimum. For a Senior Manager who advises, we also look for:

• Management of a regulated business, including oversight of other advisers, file checking and competence supervision.
• Consumer Duty experience, particularly around ongoing advice, fair value and vulnerable clients, which the FCA has scrutinised closely in advice firms.
• A clean advice record, including complaints and any Financial Ombudsman findings, which regulatory references may disclose.
• Client relationships that can move, or the ability to take on an existing client bank, depending on what the firm needs.
• Cultural fit with an advice business that is often founder-led or part of a consolidating group.

Specialist Advice Permissions

Some roles need more than the standard Level 4 qualification. Pension transfer specialists, for example, need an additional specialist qualification, and advisers in areas such as long-term care or equity release need their own. Where a Senior Manager will also act in a specialist capacity, we verify the relevant qualifications as part of the search.

Permanent, Interim and Fractional

Most Senior Managers who advise are permanent appointments, because client relationships depend on continuity. Interim appointments can work where a firm needs a Senior Manager to cover a gap while a permanent successor is found, although interim holders are less likely to take on a full client bank. Fractional arrangements are rarer for advising roles, but some smaller firms use a part-time director with advice experience alongside the founders. Our page on fractional and interim SMF cover explains the options.

The Advisers Around Your Senior Managers

Many firms recruiting a Senior Manager who advises also need advisers and paraplanners. Advisers who aren’t Senior Managers are usually certified staff under the Certification Regime, assessed by the firm each year rather than approved by the regulator. Our page on certified advisers and RDR-qualified roles explains how we recruit for those roles, and our wealth management sector page covers the wider senior team.

Timing and Approval

Advisers with client banks often have notice periods and restrictive covenants that affect when they can start and which clients they can work with. Add the regulator’s assessment period, which can take up to three months once a complete application is submitted, and planning should start early. Our SMF appointment timeline sets out the stages.

Frequently Asked Questions

Does a Senior Manager who advises need the same qualifications as other advisers?

Yes. The RDR competence requirements apply to anyone giving personal recommendations on retail investment products, whatever their seniority.

What if a candidate’s Statement of Professional Standing has lapsed?

They can’t advise until it’s renewed, which depends on meeting the CPD requirements. We check SPS status with the issuing body before introduction and discuss any gaps with you.

Which designation should an advising director hold?

Often SMF3, but it depends on the firm’s structure and the director’s responsibilities. At partnerships, SMF27 may apply. Our SMF3 or SMF18 article explains the choice.

Do you also recruit advisers who aren’t Senior Managers?

Yes. See certified advisers and RDR-qualified roles.