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%.
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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