According to TAA chief executive Neil Macdonald, the government should consider removing the obligation for advisers to sit the exam to help streamline financial adviser education standards, adding that the exam is fast approaching its use-by date.
“The real purpose of the exam, which financial advisers first sat in 2019, was to establish a level of professional competence in the overall population of Australian financial advisers at the time, many of whom did not hold the new FASEA-recognised tertiary qualifications,” Mr Macdonald said.
He said that many advisers who remained in the industry sat and passed the exam by either the January 2022 deadline or the October 2022 extension, adding that most also undertook tertiary education to ensure they meet the requirement to hold a relevant tertiary qualification by the 1 January 2026 deadline.
“Obviously, those who meet the experienced adviser definition are not required to hold a relevant tertiary qualification, but we have found that some of them have committed to further tertiary education anyway,” Mr Macdonald said.
With anyone intending to join the profession now being required to complete tertiary qualifications at AQF7 level or above, Mr Macdonald said their knowledge is already thoroughly tested along the way.
“Hence the exam should become redundant,” he added.
“In essence, there will be no advisers whose competency needs further testing. The exam therefore becomes an unnecessary additional expense for those wanting to enter the profession, who have already heavily invested in their education.”
The TAA added that despite moving from an in-person to a wholly online exam, the cost of sitting has increased from $540 plus GST in 2020 to $1,500 per sitting.
“In addition to the financial cost, the requirement to do the exam and the timing of available exams makes it harder for people to do their Professional Year,” Mr Macdonald said.
“These requirements are creating further barriers to entry at a time when the profession desperately needs new entrants and consumers want access to affordable, personal quality advice.”
In its 2022–23 annual report, the Australian Securities and Investments Commission (ASIC) revealed the statistics surrounding the four cycles of the examination it “successfully administered” from 1 July 2022 to 30 June 2023.
“ASIC continues to support the professional standards reforms introduced in 2017 to encourage higher standards of behaviour and professionalism for financial advisers,” ASIC said.
“The examination is a key component of the education and training standards that all financial advisers must complete to provide personal advice on relevant financial products to retail clients.”
According to ASIC, 1,297 candidates sat the examination between 1 July 2022 and 30 June 2023. The pass rate was 52 per cent in the July–August 2022 examination, 57 per cent in the November 2022 examination, 67 per cent in the February 2023 examination, and 63 per cent in the May 2023 examination.
More than 20,500 candidates have sat the examination since it was first administered in June 2019, and of those, approximately 92 per cent have passed.
The Exam is the biggest waste of time. I have recently sat it, after spending six years in the Industry and having a Bachelors degree in Finance and a Graduate diploma in Financial Planning. This education cost me close to $30K – I then need to sit a $1,500 for something I have already been examined on throughout my Degree and Diploma. Where is the $1,500 going? Why do people need to pay a further $1,500 for each sitting?
How do people from less privileged backgrounds afford to re-sit if they do not pass?
It’s a waste of time and preventing people from moving through their PY because you can only sit it every two months or something considering it is fully automated?
I agree, there should be a professional year and new entrants should have a relevant degree. But to throw in a stupid three hour exam for nothing is just bureaucracy going crazy. Scrap the darn thing.
If you can’t pass the exam you don’t deserve to call yourself a financial advisor. Those who sat the exam did they hard yards. there’s no easy ways in. Stop looking for a short cut. Do the work it’s simple
Utter joke. The new format of the Exam is just moronic. You literally can’t study for it – $1,500 for nothing.
Agree for new entrants who have to have significant education and PY hurdles as their pathway. There are still many existing advisers who have failed the exam multiple times, who should not then be allowed back in without passing. If they failed the exam, they shouldn’t be advising.
The Exam is a marker of professionalism that we have all had to undertake. I believe we should maintain it as it strengthens our pursuit of becoming a profession.
I don’t see any issues with the Adviser exam. This helps replicate becoming a CPA (and other professions). For a CPA, you do your degree, work under a licensed professional for 1,800 hours and then pass a CPA exam.
Continuing to establish ourselves as a profession is a great thing. The adviser exam seems to be a positive addition to this mix of being able to demonstrate competency amongst practitioners.
I understand the TAA point that “the profession desperately needs new entrants and consumers want access to affordable, personal quality advice.” but there are larger problems than a one-time 3-hour exam at a cost of $1,500. Licensing costs are prohibitive, heavy (and duplicated) regulation makes advice provision onerous and with the prior scandals (as evidenced at the royal commission 2018) could be said to reduce the appeal of financial advice as a career to persons weighing up Accounting and Law and other professional services careers.
And many will disagree on this final point but I do believe there is probably still too many vertically integrated business models and reliance on commissions to move us from the perception of a sales focussed industry to an advice based profession (where I imply the perception of being a profession helps attract more new talent).
I agree in principle about a professional exam John, but you are focusing on the wrong exam. The FASEA exam is a very simple exam focused on regulatory, ethical, and behavioural issues. It is just a revision of about 20% of the non technical content taught in financial planning degrees. As AMPFPA says, it’s a pretty pointless exercise for new advisers who have already been examined on that content in their (now compulsory) degrees.
The financial planning equivalent of CA or CPA exams is the CFP exam. It is focused on high level technical skills, and is much harder than degree content or the FASEA exam. Ideally CFP should be the recognised pinnacle of financial planning professional training. Unfortunately CFP is licensed by FPA/FAAA who have massively tarnished its reputation by giving it away to barely educated “grandfathers”, and through FAAA’s product company conflicts.
Hopefully FAAA’s licensing contract for CFP will be removed at some point, and the grandfathers stripped of their undeserved designation, so that CFP can then become the credible professional designation for financial planning it should be.
I support the retention of the exam, but the often cited accounting example is not strictly relevant as you don’t need to be a CPA or CA to be a ‘professional’ accountant. The CPA/CA is more akin to the CFP.
Scrap Jones, instead
I hated the exam, but I don’t agree with FAAA. If you want a Financial planning profession, if you eventually want to fill a larger role in future self-regulation, don’t go reducing these barriers to professional practice. Other professionals have a competence style exam to practice, I think nowhere is it anymore relevant and applicable than in the financial planning profession. But the exam format definitely needs changing, so far it just reflects a prescriptive compliance-based assessment, but it needs to assess a more general competency framework, much like examinations in law and medicine.
Just read a story that AMS Ivanhoe Lawyers, John Adams (deceased ), potentially cannot trace between $20Mill to $100Mill of funds supposedly meant to have been invested in their Trust fund but instead possibly been directed to private accounts held through the Commonwealth Bank leaving many people destitute through losing their life savings entrusted via a law firm’s Trust account.
Now, Lawyers are held up as a profession with a fiduciary duty to their client first & foremost.
Lawyers have not been forced to sit an Ethics exam because it is accepted that as they are a “ profession “ this is not required.
Well, tell this to the investors that have poured their life savings into a “ safe as houses” Trust account and are now penniless.
This makes a complete mockery of the extended discrimination & persecution of Financial Advisers over the last decade requiring them to pass an Ethics exam when other so called professional occupations are left to run their own race simply because of some ridiculous outdated notion that because they have completed a Bachelor degree in Law they are somehow automatically trustworthy & ethical.
Pathetic at best.
I wonder why AMP advisers are so keen to avoid doing an entry level exam?
Because it is time waster?
Really??..
Great comment.
In addition existing advisers will have 10 years plus experience.
Be required to have an unblemished history.
40-45 hours of CPD points per annum
What else is really required. They are here to serve the community – lets get on with it.
A refund would be nice of it gets scraped.. it’s principle, not about the money. Advisers are sick or paying for the rest of the industry and regulation.