Advisers unable to exit seek ‘general advice’ role

Half of advisers who have not passed the financial advice exam still intend to stay in the industry with the most-common role as a mentor of new advisers.

In a survey by financial adviser Philippa Hunt and Forte Asset Solutions of 693 respondents, it found many would like to leave the industry but were unable to do so for a variety of reasons.

Reasons for remaining included financial difficulties, being too young to retire, feeling stressed and anxious or having no choice as their business had lost value. Over a third said their business had seen decreased cashflow over the past two years and 30% said they had seen ‘significantly decreased cashflow’.

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Three-quarters of respondents classed themselves as a ‘staying adviser’ with just 19% saying they intended to exit and 62% said they intended to stay past-2026 if they completed the relevant qualifications.

However, due to their inability to depart yet, advisers who had not yet passed the exam were considering alternative roles such as bringing in referrals, mentoring new advisers and training roles. Over half (51%) said they would intend to stay in a ‘general advice’ role if they failed the financial advice exam.

Advisers most likely to remain in the industry were male, aged between 41-50 and had been advising clients for 15-19 years.

This was in contrast to widely-reported figures about adviser exits with the number of advisers falling to around 17,000.

Adviser exam

The financial adviser exam was cited as one of the highest causes of stress for advisers and respondents identified numerous flaws including ambiguous and irrelevant questions, difficult to pass on the first try and a bad set-up on exam day.

Some 88% of respondents said they had passed first time and they spent 31-60 hours of study in preparation. Just over 10% said they spent over 100 hours studying for the exam, but this rose to 30% for those who had sit multiple times.

Of those respondents yet to pass, 33% had made two attempts and 34% had made three or more attempts with roughly half saying they would have another attempt in 2022.

As to how the exam could be improved, the most popular response was removing confusing questions followed by providing specific feedback on questions.

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how can you be a mentor to a new adviser when you are not qualified to be an adviser? if you haven't passed the exam you can't mentor those completing the PY.

Yes, you must be licensed for GA.
In the last 2 weeks about 300 Advisers were taken off the FAR (backdated to 31/12/21) as they hadn't passed the exam and aren't eligible for the 2 strikes exemption. ASIC are still checking. There might be an even bigger number ceasing soon.
There are still a lot of dopey advisers out there which make us look bad.

You still need to be authorised, pass the exam and finish the education by 2026 to be allowed to give 'general advice'.

Oh no you don't mate!!!!
You do not have to complete the exam and do the additional education by 2026 to give general advice.
I hope you are not a Financial Adviser. If you don't know the basic requirements how can you give financial advice? Did you pass the exam?

RG 244.37: "As a general rule, if you carry on a business in Australia of giving general
advice to clients that is a financial service, you must hold an AFS licence
with an authorisation to give general advice, or be an authorised
representative of such a licensee, unless an exemption applies."

No one is arguing what you say Opitimist re licence and authorisation. The point is the exam and additional education is NOT required for general advice.

The exam is mandatory to remain authorised and licensed (on the FAR).
You may not give general advice unless you are authorised and licensed and on the FAR except in very limited circumstances such as being an employee of a Super fund.
ASIC just went through all of this with Finfluencers. It seems you weren't paying attention.
Do not collect $200...

You really don't know the requirements do you. Don't rely on newspaper articles etc. Read the regulatory requirements.
An adviser who only gives GENERAL ADVICE is not and does not have to be included on the FAR. If an adviser gives personal advice they must be included in the FAR.
If I am wrong please give me the regulatory reference to demonstrate I am wrong.

"An adviser who only gives GENERAL ADVICE"
You mean like a person being a "relevant provider" under SECT 910A, a Financial Adviser which is a restricted term under SECT 923C, who must be authorised by an AFSL.
That type of "adviser"?

What are you on about? If you are going to start quoting sections of the Law make sure you understand it.
'A 'relevant provider' is: an individual who is a financial service licensee, an authorised representative, employee or director of a financial service licensee (or a related body corporate of a financial service licensee) that is authorised to provide PERSONAL ADVICE to retail clients in relation to relevant financial product'.
A person (adviser) as described above is required to do the exam, and the prescribed education by 2026 and be included on the FAR - why? because they provide PERSONAL advice.
A person who is not a 'relevant provider' ie, a person who gives GENERAL financial product advice only, does not need to do the exam and higher education or be included on the FAR, why? because they don't give PERSONAL advice.
It's pretty simple and financial services 101.
God help us all!!!!

yeah but what if the general advice provider gives general advice to a client with a big billboard that says general advice only given here and with him (the general adviser) in a (very large) photo depicting the Marlboro man but accidentally takes into account 1 personal circumstance of the client what happens then?

what if that same client is also a wholesale client but upon further investigations (in a court of law ) is financially illiterate and deemed to be in fact a retail client.

just curious how general advice would work?

Are you for real? I hope you are not a financial adviser. You should read ASIC’s Regulatory Guide 36 and 175 (bet you haven’t otherwise you would understand the concept of general advice vs personal advice). If an adviser takes into account a client’s personal circumstance and bases the advice on that circumstance, they will be giving personal advice. If the adviser does not follow the personal advice requirements they are in breach of the Law. The personal advice regulatory requirements do not apply to wholesale clients. Please tell us all you are not providing financial product advice to anyone!!!

Say no more !! The above commentary demonstrates why the Industry is in the state that it is. Personal Advice, General Advice, Retail Client, Wholesale Client, 1 piece of detail about a clients circumstances and so on ..... add onto that SOA, ROA, TMD, PDS ........ It's a total mess and needs to be sorted out by starting with a blank piece of paper. Good luck to those of you who have the time to work through this process.

I don't think you either read or understood the nuances of my post. I think you should reread it and then also read the comments from the general adviser at the bottom. that's what I am trying to let you know.

a case that might be worthwhile reading is Wingecarribee Council v Lehman bros a good summary is here

Im with you on this one Ohno. I think the people getting confused here with general and personal advice might be the same people that constantly claim that "industry fund advisers" dont have to provide SOA's or complete the same qualifications. Personal is personal, general is general and intra fund is basically a payment method that can be either personal or general.

Spot on ME. I find it incredible that there are possibly people calling themselves financial advisers giving advice on a persons life savings and they don't even know the basic fundamentals of the inductry they work in.

maybe they are just playing you and trying to scare you. maybe they are goading you for fun.

So what product would typically (%) be recommended when a employee of a product manufacture provides "Advice"?

Actually ME, union funds have two different types of "advisers". The fully qualified and licensed ones who provide comprehensive SoAs, and the unqualified workplace and call centre salespeople who provide undocumented personal advice recommending switching. The latter group are not authorised to provide personal advice at all, but they do anyway. They are the ones who "dont have to provide SOA's or complete the same qualifications". It is an issue of selective non enforcement. Like accountants.

Funny ME you mention intra fund advice, case in point I had a client walk in a few days back , wanted a second opinion from the "advice" his fund gave him. He has a inheritance, what was the super fund advice? Max out all contributions into their fund of course, no other alternatives offered. All said over the phone as "general advice". Thing is after taking the time to actually get to know him, he was quite ill, and very worried about his debt levels, he has a few credit cards, personal loans, and also has a very big mortgage, so my advice was to PAY OFF the mortgage and all of his debt first, he had more than enough already in super to meet his retirement goals if he makes it that long. This just shows the total clusterfark that is intrafund advice, the only thing they advised on was to contribute more to the fund, clients best interests or funds best interests? General advice should also be just taken away, there is no such thing, you either get personal advice, product information only, or you talk to a mate at the pub. There is no middle ground, maybe for you self interested ones sitting behind products, but for the clients as my example proves, they are the ones getting the wrong advice time and time again. Lucky he was smart enough to get a second opinion. Its not us that need to understand the differences in advice, its the clients and at the moment they cannot.

Hang on... you're getting mixed up between the two types of Union Fund advisers...

Phone advice would be the from the second type above, "...the unqualified workplace and call centre salespeople who provide undocumented personal advice recommending switching." This group are not authorised to provide personal advice at all, but they do anyway. Selective non-enforcement.

Intra-fund advice is provided by way of an SOA, but the adviser (who should be qualified) provides personal advice, but only in relation to assets and strategies pertaining to the relevant union fund investments, balances and Super Rules etc. I think such an adviser would have to take into account the guy's bad health, but I could be wrong, however.... he wouldn't be able to advise on paying off debts etc, because that's not limited advice relating to Super or his union fund. :P

General advice, on the other hand is promotion of product features without reference to the client's situation at all.... such as Choosi et al selling insurance through TV advertising. No personal advice provided,,, no need to be authorised on the FAR.

Intra-fund advice refers to scaled advice about an existing interest in a fund. It does not necessarily require an soa but may be paid for across the entire membership. The intra fund advice can be general ie not taking into account specific objectives and therefore does not require an soa or FAR registered adviser. Intra fund advice may also be personal advice taking into account personal situation and objectives and seeking to influence. This would require a FAR adviser and an SOA. As its intra fund the soa can be charged across the membership or to the individual. Consolidation of accounts for eg is not intra fund and therefore would need to be charged to the person receiving the advice with an soa. If general advisers are providing personal advice without being on the FAR or providing an soa then they have overstepped the line. Just because they do it, doesn't mean its allowed. I would suggest if people are aware of this happening then they report it to ASIC.

Really - since when? From my understanding, the only people having difficulty complying with the Red Tape to provide "Advice" are those "Authorised" to do so - not much issue with for anyone else - or Product Providers - feeling stitched up yet?

As I understand it you don't need to meet the FASEA exam and education requirements to give general advice. However you do need to operate under an AFSL. How many licensees would be willing to have someone under their licence who is restricted to general advice only? Older advisers may want to continue on in a general advice only capacity, but finding a licensee willing to take them is another issue.


You can't give general advice without having or being a representative of an AFSL, no?

Correct, but you don't need to be licensed by ASIC, nor complete any relevant "adviser" training.

How would advisers playing in the general advice space successfully commercialise it without tripping over the line into personal advice? They can't all be finfluencers, the days of the public seminar are gone and selling financial products to clients for whom you have personal and financial information is too close to the line.

You can't pass that exam? Go make some decent coin as a real estate agent. You are clearly great with your sales skills and pretty decent as a relationship manager.. BUT you have no place caring for people's financial futures if you cannot pass that exam.

Just jump on Tik Tok and sell NFT's.

While I agree with some of the previous comments, some of you are being a bit harsh. You can absolutely mentor someone, even if you can't pass the exam. The content of the exam is only part of what financial planners do. Failing the exam doesn't make you unethical, just like passing it doesn't make you ethical.
With maybe 20 years of experience or more for some, there is still a wealth of knowledge in relationship building, strategy and numerous other things that a 'failed' adviser could provide guidance. It's like saying you can't coach an AFL side because you wouldn't get a game now.
Sure they can't provide any sort of advice, but I could see a useful place in the larger businesses for some of those on the way out.
The real estate option is not a bad one either. You'd make a bucket load more money than as a financial planner.
And yes, I have passed the exam.

I don't know about anyone else, but if I were a new entrant I'd be very wary of taking advice from someone either too stupid, lazy or short-sighted to refuse to do the exam, instead clutching to the remnants of a business as a glorified leech.

You might be wary as a new entrant, but those of us in the industry who know much more than just the FASEA exam know that seasoned advisers have much still to offer.

....and I have also passed the FASEA exam. Yay for me. LOL

From comments I have heard within industry circles the plan by some of those that do not pass the exam or meet education requirements is to effectively provide 'shadow' advice. They sit in on the meetings along with the authorised person giving advice and the authorised person signs off on it or they only work with clients who are wholesale investors. I have already seen ex-adviser becoming Money Coaches and providing general advice regarding investments. Agree that ex-advisers can mentor a new adviser but they cannot be their supervisor for their professional year. There is already too many people providing 'General advice' that do so without a license but there is a fine line between 'general advice' and 'personal advice' because as soon as you know anything about the person that influences what you tell them then doesn't it become personal advice.

To the people here 'name calling' and making toxic comments about other advisers (I'm looking at YOU, "OPTIMIST"), please, GROW UP, and pull your head in! There's no place for that toxicity or childishness spite here. As if there's not enough toxicity in our industry with politicians, Hayne and his Royal Commission travesty and miriad other entities trying to drag us down.

Now, on to more professional content, I was a RISK adviser for 36 years. I left due to being unfairly being forced to do a financial planner/investment planner exam and full qualifications of course. I seriously considered doing mentoring. I would have loved the role under normal circumstances, loved teaching young ones or new entrants. As a risk adviser and relationship manager over 3 decades+ I felt I had much to give that could not be found in exams, qualifications or digital text books.

In all good conscience I couldn't bring myself to do it. I simply could not know that each day I could 'speak up' the industry to keep them positive and moving forward. How could I, after knowing the cash flow numbers for businesses, especially risk businesses decimated by low commissions now. Please don't insult yourself or me by saying risk advisers can charge fees! That argument HAS been put to bed. New entrants simply cannot build a business on 60/20 commissions. Cannot build a business knowing for a FULL TWO YEARS the neophyte can have his/her honestly earned remuneration clawed back at a moments notice. I could not, now, be positive enough about that stuff in all honesty to myself OR the new people for which positivity and a high expectation for their new chosen future industry is paramount. Sorry, but these are my honest feelings and I know I am not alone in them.

If you had run a good business for 30 years you should have plenty of trail now and should not be relying on upfront comms. At worst you could have ridden it out for 3-5 years until the higher trail kicked in of 22% to compensate you for the reduce upfront comms. Personally, the risk side of my business has never looked healthier

The last thouhhts i have are initial coms for me. I am fine financially. It is the NEW ENTRANTS, as i mention, that i worry about. All in my comment above. Please re-read.

Lot's of "I" in those statements...It's all about you.. Well....You had 36 years to do a 2 year part time course to prevent that mess and you said stuff it...You said you couldn't bring yourself to do it...more so you left at a time when you could sell your business at 3 times no doubt..whilst for everyone else, it's a write off. .Thanks for nothing...Good bye...don't let that door hit you on your way out. If you aren't the type of person that wants to invest in yourself, your industry, your peers by doing a course costing $4,000 you're not the type of person that should be "mentoring".

Sadly, 'Old Bob' it is your sort of attitude making it even more difficult for your fellow advisers 'Old Bob'. You don't know me but are arrogant enough to know precisely why I've left. You need a mths lesson BTW if you think we had 3 decades to do the exam LOL. I'll leave you with your self satisfied lazy attitude knowing you are free to be as inconsiderate and thoughtless in non-support, heckling and derision of your fellow advisers. You would be the classic kid who was the school bully, I've seen your type many times with the biggest chip on their shoulder and the coward when someone stands up to you. Typical bullying keyboard warrior. Why not put your real name to your comments if you're fair dinkum?! What are you scared of - all bullys are scared of something. If you ask me, I think most here can see the 'adviser' that really needs to "not let the door hit them on the way out".

"Had 36 years to do a 2 year part time course....."
Name the Course and who offered it 36 years ago Old Bob.

The industry is losing some great financial Advisers!!
Most Advisers have a great balance of empathy; technical and coaching capability. These are attributes that are shared with being a claim advocate. We have had several experienced advisers ask to join us, so they can continue to help clients whilst leveraging their years of expertise!!

Having provided general advice in tier 1 financial products and mentored who aspire to be an advisor here are my observations.

Individuals who have started of providing personal advice and now are reverting to general advice often trip up when it comes to the boundaries between general advice and personal advice. Old habbits die hard, and experience advisors are often accustomed to tailoring their conversation to the needs and personal circumstances of their client. Given the recent precedents set by well published court case, there is a very fine line between what is considered personal vs general.

Having said all of that, I am in favour of increasing educational qualification for all general advice provider as well, especially if they are providing advice on tier 1 products. This includes passing the FASEA exams. I for one have never provided personal advice, nor intend to, but have still passed the FASEA and met all the educational requirements that a personal advisor is meant to adhere to.

I think this industry will implode soon. kaboom.

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