As a leader of a professional association in the midst of the most tumultuous period in the history of the financial advice profession, I am acutely aware of the morale and mindset of the financial adviser community. Some advisers have continued to do well in the current environment, but many have not.
The issues facing advisers have recently been highlighted by the release of a research report prepared by Dr Adam Fraser of The e-lab and Dr John Molineux of Deakin University. This research highlighted the elevated levels of stress, anxiety and burnout amongst the adviser population. The reasons for this are many and varied. High up on the list are the increasing level of compliance, the new education standard, the Financial Adviser Standards and Ethics Authority (FASEA) exam and financial pressures arising as a result of reduced income and rising business costs. The extended ongoing wave of major reforms has also been a big issue. Almost universally, it is felt that these reforms have been excessive, overwhelming and counter-productive to the goal of financial advice being accessible and affordable for everyday Australians.
THRIVING OR STRUGGLING TO SURVIVE
Not all advisers are in the same position – 65% have already passed the FASEA exam and many will have already achieved the required ‘degree equivalence’ study requirements. Similarly, not all businesses have been as exposed to the impact and consequences of the ongoing stream of reforms as others.
Some advisers are in a much better position, and also in a much better mindset than others, being well-positioned to face the challenges of the future. However, others are suffering from undue stress and a negative mindset. One of those stressors is the knowledge that if they don’t pass the FASEA exam by January 2022, they will no longer be able to continue to practise as a financial adviser beyond this date.
Recent statements by FASEA suggest that around 2,000 advisers have failed the exam so far, with 882 resitting it at least once and only 578 of these ultimately passing. There are seemingly 1,437 advisers who have sat the exam at least once and are yet to pass.
Based upon the numbers available after the March exam, there are at least 5,000 who are yet to attempt it. That means that there are a lot of financial advisers who will be very anxious about what their future holds.
THE EMOTIONAL IMPACT
It has recently been put to me that some of the advisers who have sat and failed the FASEA exam are experiencing a sense of shame. I suspect that this is an insightful perspective. No doubt this feeling would be compounded where they have failed it more than once.
This sense of shame is most concerning as it is likely these advisers are being very hard on themselves. This emotional response may also be preventing them from reaching out to professionals and their colleagues for the help they need. It is the fear of what their colleagues will think, if they know they have failed the exam.
We have recently been seeking the assistance of members who have passed the exam first up, as well as those who have first failed the exam and then subsequently passed it, as part of an activity to help those who are struggling. Very few of those who have failed, are willing to go public with the impact that it has had. We all need to be aware of the emotional toll that the exam is having on many in our profession.
There will be some who say that the exam is easy, and they passed without much study. Good for them, if that is the case. It is certainly not the case for many, who often come out of it uncertain as to whether they passed or not. The exam has been set at a high education standard and the result required to pass is the credit level (typically somewhere between 65% and 75%).
There are a range of reasons why some people are struggling with the exam, including a lack of exam technique, and an inability to cope with the stress of the exam. In the case of many experienced advisers, it has been decades since they last sat exams and the anxiety alone can be overwhelming.
We all need to show compassion and play a role in providing comfort and support to those who are struggling to pass the exam. Failing does not necessarily reflect an adviser’s ability to provide great advice to their clients. Neither does it necessarily mean they don’t have the right ethical standards or technical knowledge and strategic capability.
However, failure creates self-doubt, which makes the problem worse when they come around to sitting again. Anxiety levels only escalate. As we all know, when sitting exams, having the right state of mind is critical. We therefore need to work as a financial advice community to acknowledge the emotional impact of failing the exam and the need for support and guidance.
HOW THE COMMUNITY CAN HELP
There are enough clients for everyone, and the more advisers in the profession, the better for the profession, so I call upon everyone in our community to do everything they can to help those who are struggling with the exam.
This starts by reaching out to others to ask how they are going, by not judging them and by offering to help. Just having someone to talk to may help them develop a better mindset to attempt the exam, when that next opportunity arises.
Help is also available in the form of webinars, adviser videos, exam tips and techniques and other study options and resources.
Please play your part in helping pull the financial advice community together to get through this challenge and the many other challenges already in front of us and those still to come.
Let our community be one that reaches out to help others. We don’t want advisers to feel embarrassed about failing the exam or about seeking help.
Just as financial advisers do so much great work to help their clients, please also do everything that you can to assist your colleagues. Together we can make a big difference over the next six months.
Phil Anderson is acting chief executive of the Association of Financial Advisers.