Has enough been done to slow adviser exits for 2022?

Opening the November Financial Adviser Standards and Ethics Authority (FASEA) exam to all advisers and the conditional September 2022 extension could be enough to drastically slow the pace of industry exits.

Over 14,850 advisers had passed the exam so far, but as previously pointed out by Wealth Data director, Colin Williams, this included new entrants into the industry not just experienced advisers on the Australian Securities and Investments Commission (ASIC) Financial Adviser Register (FAR).

Overall, 89% of advisers who sat the exam had passed, but this year saw the lowest exam pass rate with 67% in the January/February sitting, but the March and May sittings had seen pass rates of 69%.

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FASEA confirmed to Money Management that over 1,500 advisers had booked for the September Exam.

With at least two-thirds passing the July (which had over 2,700 sit), September and November exams, the number of those that passed the exam should surpass 18,000.

Williams said changes to the exam process had altered earlier projections for how many advisers would remain in the industry at the start of 2022.

“The pass rate has been hovering around 69% for a while so I don’t think that’s going to change too much, but it’s complicated as they’ve now said everyone can sit the November exam,” Williams said.

“Initially, I was predicting around 15,000 that have passed by the end of the year and then as the new data comes out from January next year anyone who hasn’t passed the exam would fall off.

“I’m not convinced that’s going to happen now because of the extension which will allow a certain number.

“My rough numbers were probably around 16,000, as a result of this change in November it may be higher than anticipated.”

Williams said he still expected the number of advisers on the FAR to reach 15,000 but it would take longer.

“I still think the end result will be in time during the course of next year is what we’ll get down to around 15,000, that’s just the way the trend is going whether you pass the exam or not,” Williams said.

“But we’re not going to fall of this proverbial cliff which we were set to do at the end of December.

“There will be a cliff there, but it won’t be a sharp one as a result of the extension and as a result of a larger number of people being allowed to pass this exam in November.”

The open date for registrations for the November exam had yet to be confirmed but FASEA also told Money Management it would open this week.

Advisers who sat the September exam and did not pass would be able to register and sit the November exam.

There was also the conditional extension that would go to September 2022 which was available for advisers who failed the exam twice.

However, Stephen Glenfield, FASEA chief executive, said candidate eligibility for the proposed 2022 extension was subject to relevant legislation passing Parliament and the passage of relevant regulations.

“As always, we encourage advisers to take the opportunity to sit the exam with the aim to pass it before 31 December, 2021,” Glenfield said.




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Stop extending it! Everyone has had more than ample time to prepare and sit the exam at least a couple of times. If they are still unable to pass the exam within the time frame then perhaps it is better if they receive the training and mentorship they need under the new entrant requirements to get up to speed; or perhaps this is the wake up call they need as they are not suitably skilled to be an adviser. The sooner we cull the industry the sooner we can become a profession and dial back some of this onerous compliance regime.

Just a question for Anon, do you believe passing the FASEA exam means you are "suitably skilled to be an adviser"?

Yes.

On it's own no. But being unable to pass the exam shows you are unable to learn and apply new content related to financial advice under a little bit of pressure. Advisers are confronted with new content all the time such as changes to superannuation and tax rules, and upheavals in investment markets. It is essential they can quickly understand and apply this content for the benefit of their clients. They can't be asking their clients for extension after extension until they eventually figure it out.

The FASEA exam is a bit like a training drill for a football team. Completing the training drill isn't enough on its own to ensure success on the field. The format of the training drill will never be exactly the same as a real game. But if you can't even master the training drill, you probably shouldn't be playing.

thanks Another Anon! I understand your explanation and agree in general. Your analogy is good except there is one problem I see. If your are training to play football and you are playing football that works. Comparing that to the FASEA exam is like training for football but playing chess

most of the people failing the fasea exam are accountants, stockbrokers, and timeshare (people/persons what do you call them?)

can you contact your accountant and let them know. let us know how you go, mate.

It was only extended so numbers of exiting advisers won't look so bad at the next Federal Election.
It has nothing to do with helping financial planners.
IF it affects votes and perception of the Government it gets action.

Anon, passing the FASEA exam means you are suitably skilled to pass the FASEA exam. It means nothing at all when it comes to being suitably skilled to be an adviser. Unless of course the plan by the troglodytes is to make sure all advisers are capable of being self-licenced, in which case they are going to have to spend far too much time being compliant to be able to take on clients. Yes Minister - the Solihull hospital which couldn't afford to open to patients because it was spending far too much on administration. Remember that episode? Deja Vue.

Stop associating the FAR number with the adviser number when clearly the number of advisers is much lower than this.

Pushing headline grabbing falls in adviser numbers till after the next federal election is the objective. The Liberals will then resume their agenda of closing independent non-aligned small financial planning businesses so that the product providers will be the only advice network. Super funds - intra fund advice and banks robo advice.

that explains a lot about where you are coming from and headed to!

I don't think the adviser falloff is solely due to the FASEA exam.

I used to be one of those who thought this exam was stupid and I still do, but for a different reason. I get it that we need a consistent ethical standard across all advisers, but those who are non-compliant(or bad apples) are still going to be bad apples. The only difference is that they will know they're doing the wrong thing.

The exodus of advisers is more due to the other issues with this industry... red tape, Opt-ins yearly, adviser costs, including ASIC and PI in particular, the draconian Big Brother syndrome and coming soon, Compensation scheme of last resort, which is likely to be the fund raiser from hell.

I sat the exam in July, and I expect (and pray) I passed, but if the worst comes to the worst, I can hang around and collect a pay cheque until September next year, rather than being culled at the end of the year.

I'm hopeful for the future, but I'm not holding my breath, because the picture above, of the house about to fall off the cliff is an absolutely accurate representation of our industry.

yeah, I am going into real estate sales, and mortgage broking. yeehaw.

The FASEA exam is a joke. I sent the below to FASEA and Jane Hume on 24 September 2019....
"Hello,
Thank you for the opportunity to offer some feedback on the FASEA exam.
By way of background, I have operated an AFSL for the last 6 or so years, have a B. Comm (Econs & Financial Planning), MBA (Finance), Grad Dip Corporate Governance and a slew of financial planning specific qualifications. I support the higher education requirements (about time), the new Code of Conduct (which I thought was well constructed) and the FASEA exam.

However, I was disappointed when I sat the exam last Thursday (19/09/19). This isn’t because I fear failing the exam, but because I don’t believe the questions were a true test of whether someone has the skills and capability to be a good financial adviser. Many questions were subjective rather than factual, and a case could be made for a number of the multiple choice possible answers. Of more concern, the majority of questions did not test the technical capability of participants; capabilities which are essential in providing good advice. For example, there seemed to be more focus on the psychology of clients rather than things that financial planners actually do - re-contribution strategies, insurances held within/outside of super, downsizer rules, portfolio construction etc

I’m not sure who devised the questions, but respectfully, if they were designed to “build consumer trust” I believe they missed the mark. "

the assumption built into the exam is that the technical things that financial planners actually do are already learned in the grad dip or m.fin plan, (dare I say it the CFP) or whatever the approved degree it is one does to qualify, so the only thing that needs to be tested is the three elements being: financial advice regulatory and legal requirements, constructing advice to suit advice aligned to different consumer groups, incorporating consumer behavior and decision making, and application of the FASEA Code of Ethics, and have demonstrated professional reasoning to practical situations.

Don't hold your breath waiting for MIA Jane getting back to you. She doesn't do criticism of FASEA.

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