News that a consultation paper will be developed on education standards and the adviser exam has been welcomed by the Stockbrokers and Investment Advisers Association (SIAA), with CEO Judith Fox slamming the current standards as “shameful”.
Last week, financial services minister Stephen Jones said the government would look at options to “streamline the education requirements for financial advisers” and addressed the 30 September deadline for existing advisers to pass the exam and continue to provide financial advice, saying that following the deadline, he will ask Treasury to explore how the exam can be improved, such as reducing the number of questions.
Speaking to ifa, Ms Fox said retaining experienced financial advisers will stop “thousands” more orphaned clients unable to access advice and also ensure new entrants can be mentored.
“Experienced advisers will also be there to steer clients through volatile markets. Formal qualifications accredited by the Securities Institute of Australia have been required for stockbrokers since 1960, so we always queried why their prior learning was not being recognised,” Ms Fox said.
“The education standards required by recent legislation focused on financial planning qualifications and did not take into proper account the decades of qualifications and CPD stockbrokers and investment advisers had undertaken. Many in our industry also have graduate and postgraduate qualifications suitable to working in equity markets, yet these were not considered approved degrees.”
Ms Fox continued: “Of great importance is that an expanded education pathway creates a career path in our industry, as it means that stockbroking and investment advice firms can attract new entrants, given that we hope that the degrees that are best suited to a profession in investing — commerce, business, finance and economics — will be approved.
“It is shameful that people with these degrees are deemed unqualified under the current standards, despite approval by the education regulator TESQA as these degrees being best suited to a career in investing.”
In last week’s announcement, Mr Jones also addressed the 30 September deadline for existing advisers to pass the exam and continue to provide financial advice, saying that following the deadline, he will ask Treasury to explore how the exam can be improved, such as reducing the number of questions.
Ms Fox reiterated that addressing the adviser exam has been a concern for the SIAA for some time.
“We have been pointing out for some years that the adviser exam is not fit for purpose, as it is geared to financial planning — which represents only a part of the broad advice ecosystem — and contains questions which have two correct answers, only one of which will be accepted,” she said.
“The lack of individual feedback has also been an issue. We do welcome the review of the exam, but note that the need for a review acknowledges that the exam is problematic. Unfortunately, this means that experienced advisers who have failed do not benefit from the review, despite the confirmation that the exam is not fit for purpose. The impact on those experienced advisers has been profound.”
In the lead up to May’s federal election, Mr Jones said Labor would not require advisers with 10 years of experience and an “unblemished record” to complete a university degree to practice.
Currently, existing advisers with no degrees must have an approved qualification by 1 January 2026.
On a special Momentum Media podcast recorded prior to the federal election, Mr Jones outlined his plans to address the education standards.
“… there’ll be a bunch of people who’ve been providing excellent advice for decades that we don’t want to tip them out of the industry at exactly the time when we need them,” he said.
“We need them as mentors, we need them as service providers, we need them as trainers, we need them in the industry.”
It’s a basic exam that is easy for diligent candidates to pass. The fact that a large amount of stockbrokers are failing the exam multiple times should be a ***RED FLAG*** for the regulator to investigate the standards of education and ethics at stockbroking firms. It is completely understandable that the SIAA is so vocal on this issue given its rapidly shrinking membership base, however that is exactly the point of the exam. To filter out those that should not be advising clients. I think it’s time for the SIAA to recognise that financial services regulation has moved on since the 1980s and that they just need to lift their standards. While we can feel empathy for Judith Fox’s failing membership base as they rapidly exit the industry, to lower the standard and usher them through on “red carpet” would be to fail retail clients. We need to prioritise the interests of clients and the industry, not feel sorry for candidates who can’t pass a rudimentary, vocational exam.
I have passed the exam but I am reassured that Ms Fox mentions two answers are sometimes correct, but only one is ‘right’. That was my experience and I have to say it is pretty unnerving when completing an exam that your job and career rests upon. This does need looking at for future entrants.
How are we still talking about this…?
If you haven’t managed to pass yet, please pack your bags.
Our profession has rightfully left you behind and moved on form the exam, it’s time you did too!
Whilst the majority of us are professionals at what we do – its not a profession
There are two separate and distinct issues:
(1) FASEA exam — Stupid exam but you have more than enough time to pass it so if you haven’t please leave
(2) Education — Originally it was that a financial planner needed a degree, this then got narrowed and insufficient weight was given to historical study. This is obviously flawed but you should need more than a Diploma so whatever ends up being decided should be somewhere in between. Being “experienced” does not mean you don’t need to do any study but it should mean you do less study.
Realistically the previous government was too stupid to work this out and I don’t see the new lot being any more likely to assist.
OMG, the number of questions in the FASEA exam is not the issue. The problem is the vaguely/poorly written questions and no form of consultation with actual advisers as to what should be in there and what shouldn’t. In my opinion an advisory committee needs be be put together, made up of actual advisers and a proper exam created that represents us, not the BS that was created to just tick a box!
It will be consultation in name only. Everyone knows the government and regulator have made their decisions already. Time and again financial planners have been asked to give feedback, and time and again it is ignored. Not surprisingly the issues and problems planners raise, then occur and the outcome for clients and advisers is worse.
Which is exactly why Financial Advice needs to be taken away from the current Govt. policy Treasury and ASIC regulators and governed by the Industry internally (like other true Professional bodies). The self-interested agenda driven stakeholders intent on adviser destruction have not backed off 1 iota, as plainly evident in the most recent QAR submissions.
I’ll tell you what is shameful, is that AR’s have had 3 years to pass the exam and those not competent enough to pass now want an extension added to the extension they just received or an exam with less questions.
Any industry body that poses a further extension or simplification of the exam has to ask themselves just how competent are the people they are representing.
And here come the carve-outs….
Nope, no exceptions. Anyone who hasn’t passed (and notified ASIC) by 30 Sep 2022 is gone from the FAR.