Since publishing FASEA’s latest exam results on Tuesday, the ifa page has been inundated with comments mostly of exasperation, with many advisers noting the exam itself is heavily tilted towards regulatory information with very little focus on real-world experience.
“Most senior advisers understand the requirements, but not necessarily the wording of the legislative instruments around why they have to do the compliance task they do,” one reader said, noting that while the exam may be pertinent to a compliance officer, it does very little to “measure one’s ability to provide good-quality advice”.
“The industry is already stressful enough with all the regulatory change and education requirements that need to be satisfied,” another said.
“The weirdest and most useless exam I have ever taken. A competency exam that doesn’t test your ability to give good sound financial advice, nor make you any more ethical than you already are or are not,” a third reader added.
But financial advisers are not the only party voicing their concerns, with industry bodies expressing their own misgivings.
Phil Anderson, general manager of policy and professionalism at the Association of Financial Advisers (AFA), told ifa that he is troubled by the continuously declining pass rate.
“There are at least 5,000 advisers on the FAR who are yet to pass the exam,” Mr Anderson said.
“On our analysis of the July results, around 2,300 advisers have attempted the exam and are yet to pass. Some of them have attempted it multiple times.”
He drew attention to the exam’s “huge impact” on a large number of advisers, underlining the emotion implications.
“Failing the exam has a big impact upon the confidence and esteem of these financial advisers. Failing the exam does not mean that they are not good advisers. They are just struggling with the experience of the exam, and this can be due to a range of reasons,” Mr Anderson explained.
Also commenting on the latest developments, Financial Services Council (FSC) CEO Sally Loane told ifa that this body is well aware of the hardships faced by advisers.
“We have heard firsthand how disruptive the FASEA requirements have been on financial advisers and their businesses, especially as the sector remains in a process of transition,” Ms Loane said.
“The FSC supported the FASEA extension last year to give advisers more time to meet the standards and we are pleased to see more advisers demonstrate they are capable of meeting these standards, after sitting the exam.”
She noted that the FSC will be partaking in “discussions” on ways to relieve the cost and compliance burden on a matured and more professional industry.
But the timing of these discussion will be crucial, with the total number of financial advisers currently sitting below 20,000.
As for the inflow of new entrants, that has almost come to a standstill, with data published earlier this year revealing only 23 new advisers had joined the industry in the first five months of this year, while just 11 had joined in 2020 and seven in 2019.
If predictions are anything to go by, the industry could hit single figures by the time the FASEA deadline rolls around in 2026.
Despite an obviously shrinking industry, FASEA standards seem to be here to stay.
Mr Anderson’s best advice to advisers at the present moment is to consider their mindset going into the exam.
“We want them [advisers] to succeed,” he said.
“We encourage advisers in preparing for the exam to address the knowledge requirements, but also to consider the right mindset. That means that they need to understand how they will react under pressure, and they need to do what they can to remain focused during the exam and to avoid excessive stress.”
Err.. Bit late to be worrying about the exam? This has been a known known for years now. I suspect many buried their heads and hoped it would go away.
The exam does NOT discriminate against experienced advisers. It discriminates against all advisers who have left it to the last minute.
As a Chartered Accountant in the advice “industry”, and as much as I didn’t enjoy the exam, it is about moving the industry to a profession. There are countless competent financial advisers out there but it is important that the law is understood. Accountants would learn how to do what they do over time without undertaking the relevant post graduate studies to become a CA or CPA…….
There is a 75% – 80% pass rate overall isn’t there ? If the balance of advisers can’t pass this exam, maybe they should look at an alternate career.
THE EXAM has nothing to do with advice. LEAVE THE INDUSTRY – why would anyone go through all this rubbish and the stress – ITS NOT worth it.
I was just chatting with 5 other advisers who have all successfully passed the exam and all are still considering other career options given the useless and insane burdens we continue to face in this industry.
Agreed! All this virtue-signalling doesn’t change a very simple fact.
Who has the guts to put their livelihood on the line when faced with a true ethical dilemma – particularly as the dilemma tends to be created further up the chain (conflicted business owners, conflicted licenees, etc) so the consequences on career and livelihood can be severe.
Who has the guts to be a Jeff Morris? Hats off to you Jeff. A truly brave man.
So, who will support the Jeff Morrises of our world? How long does it take for the cavalry to arrive? What penalty (in their career and livelihood) do people pay for standing up?
How much of this is covered in FASEA? ZILCH, NADA, NIL!!
Instead we have people’s livelihoods dependant on this exam full of legalisms and sophistry.
Education providers charging thousands while discussing examples of the ethical quandary of accepting pens at PD days. A waste of money and precious brainspace!
If you want to do FASEA, go for it. But don’t kid yourself that it is a ‘true-to-label’ solution.
There is a case to be made that all this is legislative failure-by-design – only one thread among many – allowing a future government to get closer to the superannuation honeypot. Labour no doubt via the Industry Funds, while even the Liberals have declared their hand via the Future Fund.
Parliament may be following the Royal Commission recommendations, but they will bend it to their Will. Make no mistake. The 4th largest private pension system in the world is a battle worth having.
Been an adviser for 5+ years and in the industry for just under 10. Am 30 years old, relevant undergraduate, Masters in FP, passed FASEA and yet I have decided to leave and found a job in another part of high finance. There is no meaningful reward in financial planning for the compliance risk involved.
At a broader level, the world is moving so fast with real innovation happening in other sectors. And here is in the world of financial planning, the innovation discussion is about making the “SOA shorter”…..what a joke! At this rate this industry will be left behind……
I sat the exam and passed first time but that was only because I put in the hours to study and learn the content. Mind you this is the first piece of study where you do not even get the relevant study material to study from the provider.
No doubt experienced advisers had trouble, FASEA has determined that all clients make bad decisions and we need to determine which method our clients use to incorrectly understand information. FASEA actually has the gall to call this financial advice construction. Forget the actual financial advice process or the actual process for constructing advice. The academics do not understand financial advice so they have taken creative license and created useless garbage to follow that helps no one and confuses what we should actually be doing for clients.
While I agree that an exam should not judge the capabilities of a person who has had many years doing the hard yards and is offering a service to the public, however FASEA detailed the areas that candidates failed – and in every exam those areas were ‘Financial Advice 101’ – the basics of providing financial advice. These days financial advice has moved on from flogging product and the primary service is actually the provision of financial advice, and the Law (whether we like it or not) sets out how that must be done when dealing with retail clients. This is where the advisers failed. If you cannot get the basics right should you be giving advice?
I passed the first time and absolutely think this exam was a farce and has no correlation to anyone being a good adviser. I’d agree it might be a good exam for someone wanting to be a compliance officer, it is totally useless for anyone actually doing client facing work.
At least any problems can be resolved in the up coming Annual exam. Back here in 2024 just watch this space.
The biggest impact to us all is the new Breach reporting, wait until ASIC receive all this extra reporting. They will need more staff and our costs will increase again.
Then what are they going to do with all these breach reports, are we going to have massive fines etc just for not giving the client a PDS for a product they have been in for 20 years and we are not making any changes. What about really old product that you just cant get a PDS for.
Missed a disclosure of the correct fees (ICR) in you ROA or SOA, wait until it is on every client as the software has the wrong value.
If you think your fees and costs are high now, just wait and see how this plays out!
Why would any join this industry or stay in it?
Agree 100% not only identified breaches but you need to self report suspected future breaches even if they will not happen. This breach reporting is bigger than opt in, fasea put together. Facing personal fines for breaching a code whos makers have been wound up and will probably be changed in the next 12 months anyway. We need to abide by a code not even einstien himself could correctly interpret. Dealerships will be looking for faults to report so they look good in asics eyes, every audit will probably throw up some kind of breach as no ones perfect. There will be no warnings given just reported breaches. Who wants to be an adviser with a breach on the far? Could be you got one fee wrong by $10, this will destroy your reputation and therefore your business.
The LIF did just as much damage and has almost killed the risk industry, has caused 1000’s of good risk advisers to leave and caused hardship to 1000’s customers who have had to cancel or reduce cover through harsh premium increases. There is one body commenting in this article who are to blame for this and should not be allowed to be further responsible for policy.
Rather than FASEA exam as it is. Why didn’t they have an exam based on competencies and knowledge to ensure (with a little bit of Fasea regulations etc) that people advising now had sufficient knowledge to do so. Then bring in the new education framework for new entrants. I think it would have added more credibility to the industry to be able to say I passed the competency exam, rather than saying “I passed FASEA, because after all what did I pass?’
Agreed Sharon. The FASEA exam is based on law and ethics, not technical competence.
However there already is a very comprehensive and rigorous exam that tests financial advice competencies and knowledge. It’s called the CFP exam. It’s about 10 times harder than the FASEA exam, so if it was made compulsory it would definitely raise standards, but would also thin the ranks significantly. Believe it or not the CFP exam isn’t even compulsory for all CFPs!! This is one reason why the FPA’s credibility is so poor. Their standards are aspirational, not compulsory.
Perhaps the best solution is for CFP Certification to be taken away from the FPA, and administered by another body that will make it more widely available to all advisers, and ensure proper compliance with CFP standards.
CFP is a joke !! in 20 years not a single client has asked me about CFP so why would anyone do it. Even the Government thinks it worthless given they hardly give any credits for it under the education requirements.
CBA did the crime and you’re doing the FASEA time. AMP did the crime and you’ve got annual FDS. Are Planners possibly the stupidest people? Why do they like to be the scape goats? Yet again we had Advisers paying an increased ASIC levy for Westpac Call Centre breaches another classic case. Why do they continue to put trust in bodies like the FPA for a mere CFP logo..What type of person does that? When does this end? Planners are the people looking after people’s money yet Planners are clearly not the brightest of individuals.
As an adviser I have to agree with your criticism. Sadly we did address this with our federal members in the West, like Ben Morton and Michaelia Cash but were told our advice bodies had already sent us down the river with their conflicting positions, so other (anti-advice) lobby groups were listened to instead. The FPA’s incompetency from my point of view is one of the largest reasons we are were we are, because they thought there would be opportunity for them to profit off all this, only to be rail-roaded themselves.
Sadly the little adviser trying to actually look after their clients, just didn’t have the time or the clout to compete against these other groups agenda’s.
Make no mistake, this was never about improving financial planning advice for the consumer, but lining other parties pockets in gold at our expense. This was all political and driven by greed under the usual guise of trying to improve something for Australians, which was all a lie. All it’s done is push up our cost and restrict access to advice to the wealthier.
Anyone defending this exam, clearly isn’t aware of what was really going on to get us to this point.
“Industry Associations also expressing dismay”…Let’s not forget the AFA and the FPA and there Union with the Banks. They indirectly supported CBA in deflection of the attention off them onto planners when they called for Higher Education Standards in return for Compulsory membership. All during a Parliamentary review.
The FPA role is to represent those parties too, so they naturally never say anything un-towards them. CBA + FPA =FASEA …. so don’t take your frustrations out on anybody other than the FPA… You’re an absolute Hypocrite if you’re crying foul, and continue to support the Board and CEO of the FPA. I am not against the FPA, just that Advisers need to understand what they get when they paid fees and what they’re contributing too as we need better representation, we cannot repeat the mistakes of the past. We’re expecting groups like the FPA and AFA to represent us when they just can’t, cause it’s not in their mandate. Blame ourselves for being mislead.
It really hit me in the guts yesterday during the podcast from Tony the ‘mature adviser’ who was saying 9 advisers older failed the exam last yr. He knew them all, & they were reputable guys who had never had their integrity questioned. On the other hand a 25 yr old, in their second yr of the business, flew through it. What are we testing here?
Check the adviser register…type in any ‘common’ first name and the number of ceased advisers versus current is alarming…
I seriously cannot understand why an experienced adviser would not pass this exam. I finished the exam with 1 hour left to go !! I certainly found having just finished the Ethics exam helped a lot, rest was just off the ‘top of my head’ based on 20 years of experience. I really didn’t need to refer to the material much either.
I think people are over thinking it ..There was nothing there that needed study nor can you actually study for it.
I would have though someone new to the industry would have trouble , certainly not someone with experience.
Look as brutal as fasea is, it’s doing the job it was
Meant to do. That is and sadly, identify those that probably shouldn’t be giving advice to people in the first place. It’s been out there for years now, the increased education standards have been kicking around since the 90’s. if by now, with 2 sittings to go you still haven’t ticked the box, it’s time to exit gracefully.
Never once do you post my comments because they are too controversial? Passing or failing is not the issue?
Integrity is assessed over time and peer managed?
The industry does not have issues there are rotten tomatoes in every occupation.
We are already over regulated
Time for it’s abolishment
All forced through under the veil of covid and just before a catastrophic recession
I think that Dr, Prof Mark Brimble would be pleased at what a great process the FASEA exam has been shown to be.
Yes, as he has been funnelling new graduates to AMP for years. Words fail me to describe doing this while being on FASEA’s board and nobody flagging this for years.
Thank you IFA for running this article, as it does get to the heart of the problem with the exam. Years of experience teaches you everyone’s circumstances are wide ranging, the exam has highly subjective questions and almost require a dart board approach between two to three of the multiple choice answers. Even with the short answers response, the FASEA trainer say “don’t through the kitchen sink at the answers, but also don’t write too little”. Not all people learn the same way and the feedback from exam is way too little, it is crazy that you do not get to see which answers of the questions you got wrong and see written feedback from the “experts” on why you would have been marked down on short answers. I have a Masters in Finance, I have been working on my craft for over a decade, I have never seen a University exam or non-university exam structured like this, yet apparently all the years of experience and high levels of education will account for nothing if this ONE exam is not passed. Throwing the livelihood (and many others) out the window, not because they are not good at their job, but the exam which does not come even close to replicating real life situations, they could not pass in the short period of time (3.15 hours). The amount of pressure is insane, especially in these insane pandemic times and changes to the industry, on top of running a very successful independent business. I wonder how many legal firms will be sitting waiting to see the potential of class action lawsuit against FASEA arising from the poor management of this situation, FASEA is a private organisation BTW and not even run by the Government. Go figure.
I believe most are over thinking this. I arrived in Australia in late 2018, took the exam at the earliest opportunity and passed first time. IMO there is no reason at all why an adviser who has been working in Australia and has studied the suggested material cannot pass this exam. Inappropriate and irrelevant it may be (not for me), but passing is a requirement so you have no choice. This is not a hard task. Writing an SoA is a harder task, if you can write an SoA, you can pass this exam
100% – just a bunch of lazies
Sadly completing a FASEA exam does not alter a dodgy persons Ethics one bit. It is once again a money grabbing system to add to the pile of extra overheads that Advisers now have to pay. Sadly history has shown us that their are dodgy un ethical people in All professions and by completing an Exam will not change the spots of the Leopard
People giving intra-fund advice should also have to pass the exam. This is because the exam is focused on ethics and regulations.
Do intra-fund advisers need to sit the exam?
“ex-liberal” – PMSL!
Could be any one of thousands of us! I do think they’re (liberal pollies) are starting to get a little nervous. However, lets not forget how they promised to ‘fix things’ that were blatantly wrong with the royal commission recommendations and have since suffered severe amnesia. Actions will speak louder than words.
Thinking you have leverage when you don’t usually leads to a painful lesson.
They do.
They don’t.
Licensed advisers who give intra fund advice do have to pass the exam. But there are very few of those.
Most intra fund advice is given by union super sales reps and call centre operators. They don’t need to have passed any exams, of any sort, ever.