FASEA believes exam is 'fair'

The Financial Adviser Standards and Ethics Authority (FASEA) has defended the fairness of the eponymous exam and says the high pass rate shows it is an achievable exam for “competent” advisers.

At the conclusion of the May 2021 exam, 16,700 advisers had sat the exam with 14,850 advisers passing, which FASEA said represented 70% of the Australian Securities and Investments Commission (ASIC) Financial Adviser Register (FAR).

So far, 89% of exam takers had passed and FASEA said the pass mark of the exam was aligned to a typical university credit range.

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“The credit-level standard required to pass the exam reflects the minimum level of competency required for professional practice and that all questions are set at a difficulty level that a competent adviser should know,” FASEA said.

“The high pass rate reflects that the exam is an achievable exam for competent relevant providers regardless of their area of specialisation.”

Phil Anderson, Association of Financial Advisers (AFA) general manager policy and professionalism, said it was interesting FASEA referred to all questions being set at a difficulty level that a competent adviser should know.

“Does this suggest that they think all advisers should get all questions right?” Anderson said.

“This is of course nice in theory. In practice, we have a number of good advisers who are struggling with the exam, and some of that comes down to the pressure and anxiety that is generated by an exam with such extreme consequences.

“It might also be related to difficulties that they are having with their exam technique or using the technology.”

Anderson had recently wrote for Money Management about advisers that suffered from undue stress and a negative mindset, in part due to the pressure of the exam process.

Trouble with pass rates

FASEA said the 89% pass rate was a boost for consumer confidence and a milestone for the industry.

“These advisers have demonstrated they have the knowledge and competencies to understand and meet their requirements when providing personal advice to retail customers,” FASEA said.

Data from FASEA showed that experienced advisers with a bachelor’s degree or higher have a pass rate of 92% compared to an 80% pass rate for advisers without formal education.

“This outcome is consistent with parliament’s view that all relevant providers should hold a bachelor’s degree or higher qualification and supports the vision of the impact of lifting education standards,” FASEA said.

Its data also showed that specialisations could not be argued as a factor for pass rates.

“Stockbrokers have been particularly vocal that the exam is not fit for purpose, FASEA analysis indicated that the pass rate for relevant providers who work for stockbroking Australian financial service licensees (AFSL’s) is 84% and that 14 of the 20 stockbroking on the FAR have pass rates above 84%,” FASEA said.

Despite FASEA’s praise of stockbroker pass rates, Colin Williams, Wealth Data director, said his data showed there was cause to be worried.

“I believe the reference to 84% are the pass rates for the advisers who have attempted it,” Williams said.

“I think the problem with the stockbrokers is that quite a few are not going to be bothered to take the exam.”

Williams previously said he believed 71% of current advisers had passed the exam, as FASEA’s numbers included advisers who were new to the industry and yet to be added to the FAR.

His data also showed that 70% of advisers that were classed as ‘investment advisers’, which included stockbrokers, had completed the exam versus 78% of the holistic financial planning peer group.

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Fair and relevant to the industry are two completely different things.
The exam is pointless, it should have been developed by advisers for advisers not lawyers who have been destroying our industry for years!

Being 58, and having not studied for years, I approached the exam and the ethics course in 2019 with a positive mindset and an acceptance that it just had to be done.

I chose to do it early in case I failed and had to write it a few times. By doing it early, I knew I had given myself some breathing room.

Fortunately I passed it first-time. And thank goodness -because I would never have been able to do it last year. My clients needed me through the CoVid market crisis.

Other than those people who have a real impediment - such as anxiety - I do think that the whole process has been fair - and good for the developing profession.

Its a quirky little exam - but there really has been enough time over the last 2.5 years to get it done.

I too did the exam within six months of it being released and felt that the exam was OK. I was 59 at the time. Just wanted it out of the way.
I also started the Grad dip when the exam was released and finished it and then did the masters as well and finished earlier this year. I only received 3 credits form the old DFP, I had no previous degree and have been in the industry for over 30 years.
There has been plenty of time to do the exam and you do need to study and prepare. Likewise there is more than enough time to achieve the education requirements.

I am an Investment Financial Adviser and have a great record at doing just that for my clients. I am not and do not want to be a Lawyer or excel at legal studies as presupposed by FASEA in its legally based exam. I hold a Bachelors degree a CPA and passed their CFP exam which tested all areas of Financial Planning not just legal.
Why should I lose my livelihood (24 years without a complaint) on the basis of irrelevant case studies that have never occurred and will never occur. if you pick the right clients and are honest laws can be referenced at a moments notice. This stinks !

For FASEA to believe that “This outcome is consistent with parliament’s view that all relevant providers should hold a bachelor’s degree or higher qualification... " shows the complete bias that this whole process is built around. All it (the outcome) actually shows is whether you can sit a formal exam and interpret an examiner's requirements appropriately. I have never been to university, but have been in the industry for over a decade and investing in the real world for over 25 years. I passed the exam first attempt, but don't believe the questions necessarily represent the competence of an adviser in any way.

Interesting that federal MP's , senators etc do not require ANY qual's or experience, let alone in a field that may relate to their portfolio. This directly affects the national interests with unqualified views.

ASIC officials do not require any qual's or experience in financial services in order to regulate and shape legislation around our professional framework, which again significantly affects public interests on a national scale.


Spot on.

Noted your last sentence - would you mind elaborating please?

Hedware - it means ASIC and Treasury are all unqualified in Financial Planning, therefore have no idea and are basically pretending to have an idea, which is really very dangerous. What sort of ethics rule the lives of such people is beyond me. I am sure that is what is means.

''FASEA said the 89% pass rate was a boost for consumer confidence and a milestone for the industry.''
The consumer has little knowledge of the exam & cares even less. FASEA has done nothing to improve the quality of advisers or bring ''professionalism'' to financial advice. Its been nothing more than a component of a strategy deployed by the members of the FSC, the regulators, & legislators to put advisors out of business.
And yes, I have passed.

Reminds me of a very old saying. "Those who can - Do! Those who can't - become managers or teachers!" I would add "Those with with a chip on their shoulder - write standards to promote equality!"

Very valid.

And I believe in the Tooth Fairy.

Hey FASEA, with all your data, can you tell me what my pass mark was? I would like to know as someone without formal education where I rank against those with between 80% and 92% pass mark :)

When FOFA legislated in 2002 that became operational in 2004, ASIC suppose to be a functional regulator. The recent generation of politicians forgot what is functional, it slipped back into sectorial, with how many different new Authorities employing pseudo kings of industry? ASIC v AFCA v FASEA V TPB who are silos of turf wars - sectorial stupid. Many of case studies in FASEA exam were weird, concocted by academics, far from our middle ground in advising. Did FASEA ask AFCA for case study material on real cases so our profession can learn from common recurring stuff ups? Did FASEA ask ASIC or revise the horrors of banned adviser cases that left clients abandoned, avoiding rehabilitation to those responsible in financial services including Hayne Royal commission banks' executives and inadequate restorative justice, so our PI premiums are 5 times overkill? Domestic Governance is full of knee-jerking rat bags, who never consult with industry. Quote: "Hi Ross, The appearance of ASIC before Committees is as a form of oversight. It would be inappropriate to have others appear at the same time as they are not part of the oversight function of the Parliament. In the same way, we do not invite ASIC to appear when financial advisers and planners appear. Stay well, T" See, no chance to contradict ASIC directly before the oversight function of Parliament, as in 'procedural justice and distributive fairness (equity)' - the basis of our English Common Law functionality since Magna Carta 1215.

“These advisers have demonstrated they have the knowledge and competencies to understand and meet their requirements when providing personal advice to retail customers,” FASEA said. Nope, nothing to do with advice, technical or strategic competence. Nothing more than a feel good, politically driven, self serving ethics exam.

Spot on.

I call it the "Communist re education camp". Complements of the unqualified within Treasury and ASIC and sold to the lLiberals.

Agree in parts. but let's remember it was CBA during their Advice scandal, that recommended higher education standards and the FPA agreed. All occurring during the Productivity Review Committee into the Advice Sector. The CBA got out of jail, the FPA got compulsory membership and you got FASEA. Don't muddy history. Liberals are responsibly for implementing Royal Commission recommendations. The Banks and Mr Magoo at the FPA sold FASEA to the Liberals.

No conflicts there - i guess thats why CBA and FPA doing need re education camp in ethics.

Yogi, you forgot to mention that the FPA is also responsible for COVID and the bushfires. And for burning your toast this morning.

Just want to play devil's advocate here.
It appears that most of the very negative comments come from those who haven't passed the exam and done the education.
If we are to be regarded as a profession, then we need to argue as professionals.
The horse has definitely bolted on both the exam and education front, so our energies would be best served with the current issues being the compliance and red tape and costs.
What better way to do this would be as professionals who have passed the exam and met the education.
This would at least give credibility to any argument.
Just saying.....

I agree. Use the education and exam requirements as leverage to argue for a reduced regulatory burden.

With the ASIC Design and Distribution Obligations (DDO) taking effect on 5 October 2021, are you looking forward to switching your productive advising time work to a solution that will allow distributors to submit client complaints and nil reports every month? How many complaints went against you since FOFA 2004?

Spot on Ross. I dont think this DDO legislative change is understood by most at this point, if it was, there would be far more outrage about it....

The updated distribution agreements require a huge amount of likely manual reporting to each product provide, just another added time/cost for advisers.

Another move in the opposite direction of affordable advice.

Having written exams for Universities for over a decade, I would guess the exam was written by a Law Graduate with 12 months experience working with the CBA Advice remediation team. The second issue is that it was written to cull as opposed to testing knowledge.

Testing, not culling? You want the ones who fail to remain in the industry?

Of course. Just show them where they have erred.
I thought our regulators were about helping people and their families in this industry.
The test by the way is in the main useless,

I am impressed that you are happy to be treated by an unqualified but well counselled doctor. Very courageous.

In other breaking news FASEA also believes that the world is flat and COVID doesn't exist.

The firm I work in has two Advisors (both who have passed the FASEA exam), but one of these Advisors does not believe that COVID exists. He genuinely maintains that COVID is a deliberate fraud perpetuated by big pharma on the population to increase their profits. Fortunately he doesn't share this opinion with our clients, as I strongly suspect that if he did, we would lose some of our clients.

Ask him/her to volunteer at their local icu if they don't believe it's true.

I am an experienced Stockbroker with 22 years experience looking after a number of very happy clients , who have all indicated how grateful they are for the amount of time i have put into trying to help them through Covid.

I pushed back the FASEA exam so I could focus on assisting them. I also have a Commerce/Law degree and have never had a complaint.

I also have 3 kids under 8 who are currently home schooling which I help with on a daily basis alongside looking after clients and growing compliance work.

FASEA these are extra ordinary difficult times mentally for our clients and also our kids who are homeschooling and have spent the best part of 18 months doing this.

The only chance I have to get through this exam is to put the Interest of FASEA above my clients and my kids so I can study for an exam.

The MENTAL HEALTH ramifications for advisers is extremely serious and more so for Mums and Dads in the Industry who will likely lose their lively hoods unless advisers put FASEA and the Govt Interests before both clients and Children who need us at the moment.

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