The Financial Adviser Standards and Ethics Authority recently issued draft guidance on the compulsory exam for advisers and accountants authorised under an AFSL, including the competency areas to be assessed.
Speaking to ifa sister title SMSF Adviser, Licensing for Accountants chief executive Kath Bowler said one of the key concerns with the draft guidance for the exam is that it does not cover any technical areas including topics such as superannuation, investments and insurance.
“Yet consumers may not be aware or understand that this is covered,” Ms Bowler warned.
The exam, therefore, has the “potential to create a false sense of security for consumers”, she explained.
“I understand that to create an exam that can apply across the industry regardless of your field of specialisation they haven’t included any technical content, but by the same token, if this exam and process [are] promoted to the end consumer as a level of quality, then there’s a high risk the consumer will misunderstand that this exam doesn’t actually cover [these] technical [areas],” she said.
“You might have a situation where someone can pass this exam but have no idea how to actually give quality superannuation advice.”
Ms Bowler said one of her ongoing concerns about the new education standards in general is that there’s limited acknowledgement or recognition of professionals who just advise in one area.
“They’re [treated] like a specialisation rather than actually just providing advice in a very narrow area as more of an add on [service] to something they already do like accoun[ting],” she said.
“They’ve treated it like the medical profession where you have to go through everything first and then you become a specialist.”
Based on the draft guidance, Ms Bowler said the exam doesn’t cover or address knowledge or expertise in SMSFs in any way.
She is also concerned that the contents of the exam appear to largely duplicate the bridging course requirements.
“Existing advisers will not only be tested twice on the same material, but pay for the privilege. Surely they should only need to sit an exam as part of the bridging course or through this exam,” Ms Bowler said.
It’s Superannuation Guarantee (SG) contributions folks and it’s currently 9.5% from 1 July 2014. Source: ATO
No. Changed to 9.75% in July 2018. Previously 9.25% since July 2014. Source: Ya Mom.
Sorry, you are not correct. It’s still 9.5% for FY 18/19. The increase was deferred to 2021. Really hope you are not a licensed person. If so, you won’t be for much longer. Bye!
Omg. You’ll be telling me the confessional cap is still $23,000 next.
There has been some heated debate, here and on other forums on whether Super Guarantee should be referred to as SGC or SG. Do we use super funds definition SGC or perhaps the ATO’s use of the term (SGC) for Super G’tee charge (SGC)? It’s a crucial issue that will need to sorted for anyone sitting an exam. Many people here will need to do a bridging course in my Financial Acronyms Regulations Course 101 for $5,000. Or FARC for short. As stated before, it’s a great course covering PDS,ROA,SOA,FSG, FOS, Opt in, FOFA,FASEA…. just as a starter. I’ve stressed to FASEA several times on the importance of this area by telling them to get FARC’d but they’ve not been listening to me at all. This whole SG versus SGC stresses the importance of FASEA getting FARC and the exam covering off all these FARC’ ing areas.
Kath – with respect, you’ve only told one side of the story. The FASEA exam is just one component of the package of changes under the Professional Standards Bill (2017). Advisers will have to obtain a Graduate Diploma Financial Planning (if FASEA approved quals are not already held). The Grad Dip IS the ‘technical skills’ you refer to. In many cases, advisers will have to ‘repeat’ their technical skills via having to complete the Grad Dip, although they already have the Advanced Diploma Financial Planning.
And of course they won’t have specialist skills such as SMSF – that’s why separate SMSF courses & the like exist. And in my experience Dealer Groups INSIST that advisers obtain specialist subject accreditation (eg. SMSF, margin lending) BEFORE the adviser is authorised to provide advice in those specialist areas. You would know a ledger contains BOTH Debits & Credits – you’ve missed one side of the ledger in your commentary.
[quote=Felix]Never, it was proposed to gradually increase to 12% but got frozen at 9.5.[/quote]
Bollocks. It’s been 10% for a while now
Maybe under a certain EBA or award maybe but for the general population it is still 9.5%. Its not due to increase to 10% until 1 July 2021. Honestly confused how anyone could think it was 10% currently. People need to go double check the [url=http://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?anchor=Superguaranteepercentage#Superguaranteepercentage]ATO[/url]
10% … Hope you aren’t providing advice on that.
Why?
Planners who think there is some technical skill still left in this industry need there head read. The days of complexity are long over. If you think knowing about contribution caps, $1.6 million caps, how excess contributions are treated, is technically difficult then you’re showing your age..You must be straight out of Uni. Every budget night there is one less technical strategy closed and gone for ever. The need to test technical skills and have CPD education is a bit old skool if you ask this kid. My technical skills are tested every day when a client walks in the door. If I get it wrong it comes out my pocket. However if it gets rid of a few shonkies well then I’m all for it….but I don’t think it will, cause the real problem is the relationship between advice and product.
The more you learn the more you realise how much you don’t know. As someone that literally writes the books that Advisers rely on, the course notes and assessments at the highest FP level, sits on the pointy end of ATO committees, and works as a practitioner, I can tell you there is plenty of complexity in our work. Perhaps you just don’t know what you don’t know. Time to go back to school?
I agree the current exam proposal is substantially too easy, the focus of ethics and the Corporations act is clearly sending a messaqe to advisors to step up but we really need to ensure technical competence in all areas and that advice is coming from math not random
There is no “current exam proposal” boof, just an outline of the 5 knowledge areas.
I have never seen an academic who had practical understanding of this industry!!!!!!!
Hey… be nice, I am an academic, hold my own AFSL, PhD student and hold an MBA and understand the industry, please don’t tar us all with the same brush.
But, i do agree, lots are booksmart but have little understanding
Are we in Hyde Park so that people can speak nonsense without consequence? The idea to screen people by just one examination is absurd without looking at what they have studied and experiences they have. Try to do it to lawyers, accountants and doctors to see the reactions! The whole of this exercise will only benefit the education providers. People should only look out for those advisers who were trained by those “unqualified” short courses and mandate them for examination or more education. Vilifying the whole profession does not help at all!
Are you really trying to compare what doctors, lawyers and accountants go through compared to what advisers do to practice? I can see a small argument with some accountants but doctors and lawyers are all very qualified and extensively tested before being able to practice… Just like we should be. Thats a profession.
That is not what he or she is pointing out. It is that fact if you went to them now after setting the requirements they have to meet and then go no not good enough a doctor needs another 4 years before you can continue in your job end of story good bye
Be thankful thats its been so easy for so long. This continued expectation to bail out those who cant adapt is what holds the industry back. All well and good for those just trying to milk as much $$ until they retire but anyone who intends on being in the industry for another 10+ years should want the bar to be lifted so we get taken seriously. They were too soft on grandfathered remuneration assuming people would just ‘catch up’ and slowly phase it out, but they didnt. Sledgehammer approach to this is thanks to those still stuck in the past there.
Accountants get away lightly. Most of them have no idea!
Ask yourself why? It’s because they’re not owned by Banks.
precisely, this is why we need a different regime regulating us.
AND, that means rejecting both the FPA and AFA who are owned by the big instos
I call on all fair-minded advisers to reject the FPA and AFA now
please resign today
thank you
The technical knowledge is tested and confirmed via the need to have a degree or post-graduate qualifications.
Kath either completely missed the point of this exam (and the other components of FASEA reforms) or her comment are just “signalling” to keep her customers (Accountants) happy.
i think its just signalling…. Similar to the efforts of the main associations to show that they are ‘trying’ to achieve change in the FASEA approach. Much of what they have said is ridiculous given that much of the agenda that FASEA have to implement has already been set out in legislation by the govt. There is very little flexibility for the authority to work within.
That’s true, but they didn’t need to take such a heavy handed approach to the exam. There is absolutely no reason to have a two strikes and you’re out policy for example. Many intelligent, competent people freeze up during exams. Plus, we are talking about careers and businesses being destroyed for those who fail. It is difficult to imagine a more stressful situation. Something is clearly wrong at FASEA if they can’t recognise or don’t care about the potential harm this proposal could cause.
This article is spot on. The exam should be focused on technical ability. An absolute farce in its current state and it achieves nothing in proving to the public that advisers will actually know what they are doing with their money.
Anyone against the exam covering technical financial planning competence isn’t confident that they actually know what they are doing… That’s what the exam should be designed to weed out…
what do you mean by technical ability? Is it knowing how much you can put into super each year? what the different types of insurance covers you for? what exactly do u want tested?
Strategic competency. Doesnt need to be cut throat difficult but I know plenty of advisers that dont understand the contributions caps, what happens when excess contributions are made, how TTRs are now taxed, taxation on TPD payments within super, 1.6m caps, defined benefit pensions from taxed/untaxed sources, why a recontribution strategy should be considered to reduce tax for adult children on a superannuation death benefit etc.
Above all else, we need to confirm we actually have the knowledge to manage people’s money. I am sure we have all had plenty of SOAs come across our desk from a client’s existing adviser where the advice has been all wrong without considering a lot of aspects.
Exactly. I know a few advisers who still think SG is 9.75%!
When has it ever been 9.75%?
Never, it was proposed to gradually increase to 12% but got frozen at 9.5.
What is SG? Isn’t it SGC… Dude, that’s 2 marks you’ve lost already.
Actually it is SG – Superannuation Guarantee. The SGC is the Superannuation Guarantee Charge which is what you pay to the ATO if you have failed to meet your SG obligations……..Dude, you just got cut from the industry! Hahaha.
The SGC can also refer to Superannuation Guarantee Contribution (SGC). Anonymous, you’re back in, GE now you’re out!
a captured process with educators having their snout in the trough.
no self interest in your comment either buddy