The FASEA exam is a major pain point for the industry, with ifa readers in great numbers expressing their dismay at something many see as an unnecessary emotional and financial burden.
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.”
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