Latest exam result shows need for more entrants

15 April 2020

With the latest Financial Adviser Standards and Ethics Authority (FASEA) exam results showing another drop in the pass rate, and the reality that not enough new advisers are coming through to replace them, there is a growing concern there won’t be enough advisers in the industry to give affordable advice.

The most recent FASEA exam showed a pass rate of 82%, the lowest of the four exams, as each result had continued to drop.

Phil Anderson, Association of Financial Advisers (AFA) general manager policy and professionalism, said it was a concern that Australians may not be able to get affordable financial advice.

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“The more people who leave, the worse the situation gets, we need to hold onto as many existing advisers as we can and we need to ensure that we have a flow of new advisers into the market,” Anderson said.

He said there were obstacles making it difficult for new advisers to join the industry and not enough students studying financial advice.

“It’s been hammered as a result of things like the Royal Commission, [given] our coverage over recent years it’s not surprising that people are not saying they want to become a financial adviser, but over time that will dissipate,” Anderson said.

“It’s going to be important that we do get out to future advisers to encourage them to take the profession up.

“But there’s other obstacles that are preventing people coming into business at the moment, like the professional year which is a challenging requirement.”

Because it was a big commitment from businesses to bring in new people when they’re not going to generate much revenue, it made it hard to develop new talent, if that talent was coming into the industry.

“Some of the big starting grounds for new advisers in the past, such as the bank-owned channels, have very much reduced their businesses,” Anderson said.

“If we’re going to need to get new advisers to come into this industry via the self-employed side of the market, then things are going to need to be done to make it more economically viable for that to happen.

“We’ve got to look very closely at how we can do more to enable more advisers to come in through that channel because that’s going to be increasing important with the big banks stepping away from advice.”

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The Bank's left the Financial Advice space because it was always "economically marginal". University students are well aware that Financial Advice is in general now a mid to low income profession and are therefore opting for professions with better prospects. This therefore begs the question....why would anyone spend $30K - $50K getting a Bachelors Degree or Master in Financial Planning to work in a career with questionable returns and which cops a constant tirade of criticism from all quadrants? Reportedly approx 5,000 planners have already left the industry and not even half of those remaining have done the FASEA exam. With only 8 months left until the deadline, is it possible that Financial Planner numbers are about to drop off a cliff? Lets wait and see.

Agree and if you then add in the regulatory and personal financial risk why would you want to provide advice to a the public.

Simple answer......with high legal risk and low financial return, most will steer away from the profession.

it's more like 7,000 have left if you add in those who have left this year to date.

it's not a viable profession anymore and that is why you will see a mass exodus

most are just biding their time until the fasea education requirements are due (possibly with extension) and then will shut up shop

Yes and those that have completed their studies, without experience, can get around $500 per day on the remediation side of advice for the next 2 years, as a young person why would you bother going into private advice.

Good luck to any of those young people trying to get a real job once the bank PR money runs out for phony "remediation". They would have more appeal to prospective employers by deleting that experience from their CV entirely, and say they've been sitting on the couch for two years.

Isn't it interesting that the criticism of the way the FASEA exam is administered is not replicated across the multitude of Grad Dip and bridging course subjects run by multiple higher education providers? You would think that there would be proportionally more criticism of these education uplift subjects, given their volume. This says more about FASEA, the exam and ACER as the exam administrator than it does about individuals who have to undertake the exam. Given that in the bridging courses advisers as assessed under exam conditions (3hr exam), plus assignments and task analysis, covering the same content as the FASEA exam, the necessity for the FASEA exam remains questionable. No wonder many see it as a virtue-signalling revenue raising exercise.

This has been a disaster in the making for the last decade.
The endless and persistent vitriolic scrutiny and unfair focus on advisers in addition to impractical and unworkable compliance requirements has destroyed the self confidence and self worth of many who once were positive and engaged professionals who built tremendous relationships and trust with their clients and were able to operate viable businesses allowing them to service their clients.
If you just continue to punch away, month after month, year after year....eventually the victim will give in.
Advisers have been kicked and punched to the point of exhaustion.
For some, this is exactly what they wanted to happen.
For Australians, this endless attack has achieved nothing that will benefit consumers in the real world.
Affordable, quality advice for the masses will be not available.
This is a sad and disappointing outcome that has resulted in the destruction and dismantling of an industry that has helped so many individuals, families and businesses.

So let’s keep the advisors in the industry who have failed a basic exam because we are scared there are not enough that is a ridiculous argument.

Would you want a surgeon operating on you who couldn’t pass his medical exam would you want a lawyer fighting in court for you who couldn’t pass a legal exam would you want an accountant doing your taxes who couldn’t pass a tax exam ABSOLUTELY NOT

These advisors who failed should study harder and then they can pass and this clearly outlines there were people in the industry who didn’t have the right knowledge to provide advice

Please this is another ridiculous argument 80% is a perfectly acceptable pass rate, we don’t want this exam to be too easy.

I passed this on my first go because I already have a degree in financial planning, I know plenty of students studying Financial Planning we have some client service officers doing just that and we are willing to train them up to be an advisor we are not a big firm either

Stop making pathetic arguments like this it makes people in this industry look incompetent and lazy and I am neither

Nathan8462845....Nobody is arguing about the academic credentials an adviser should possess. It is predominantly the erosion of commercial viability of advisory businesses that is causing many advisers to exit, plus the requirement for seasoned Advisers over the age of 40, many with 20+ years "on the job" knowledge and experience, to now be required to undertake a 24 unit bachelors degree that is of concern. I am almost as fortunate as yourself in that I have 40 years experience plus have degrees in Accounting and Commercial Law, Diploma of Finance and a Diploma of Financial Planning........but yet I am required to complete the FASEA Exam (which I am okay with) PLUS 4 bridging subjects (I will reluctantly grin and bear these). The academic requirements should have been made mandatory 40 years ago.

A drama that Shakespeare would be proud of there! An 8 unit Graduate Diploma will suffice (not a 24 subject degree). With exemptions, most people will only need do 3 to 6 subjects in total. You haven't understood the requirements.

I guess the question is why, if all advisers are forced to do the ethics bridging course, and to no doubt pass associated test, would they then be forced to pass another exam to prove knowledge a second time. I also have a degree and passed the exam first go, but I do think that the double up is a bit ridiculous.

this is so we can forever stop the nomenclature of calling financial planners unqualified, forever and evermore, and for that benefit, I will not just sit one but three tests.

I'd like to remind you all, that we now have the strictest code of ethics of any professional group. and we (for existing advisers) have to have a post-graduate degree and passed a national exam.

for me, and my fellow cohort of planners who have already completed the postgraduate coursework and exam, it is now time to up the fees and thumb our noses at everybody else and attack them for being less qualified and less ethical, as we should, that is one of the privileges of a profession. attacking and excluding others. i wish the FPA and AFA would understand this.

enjoy friends. first port of call lawyers, then accountants and then anyone else who tries to give me an opinion on anything remotely connected to financial planning.

Nathan8462845, I understand the argument that Licences Financial Planners should be educated to the moon and back, but you also wrote "Would you want a surgeon operating on you who couldn’t pass his medical exam would you want a lawyer fighting in court for you who couldn’t pass a legal exam would you want an accountant doing your taxes who couldn’t pass a tax exam ABSOLUTELY NOT".
The way I see it, you and I might well be replaced (and one could argue the process has already began) by an someone with less qualifications than yourself who operates a telephone delivering Intra Fund Advice all day every day, is paid for by the product provider where the product provider charges all members a fee for this "Service", which has no obligation to provide the service to all those who pay for it, and no best interest duty - or Robo Advice.

We could all end up being the most qualified people who can no longer deliver advice because someone on a telephone delivering intra fund advice can. Perhaps you should direct some of your mind power to this issue.

To use your example of a Dr - but the receptionist is delivering it to most of your clients who you will never get to see. That's how you sell product

everything else I agree with, except your comparison with lawyers. it's not hard to study or pass a law course. in fact, it is one of the easier things to study, very easy to pass that's why it is often combined with an arts degree.

it is necessarily advanced as a complex and it's "prestige" maintained by the law fraternity to keep hoodwinking the public and to keep themselves in a job. it's very easy to become a lawyer. that is what most people with no direction in life study to become.

show me one lawyer with any ethics and I will show you a gold pot after a rainbow.

Yep....Lawyers and oil and water.
But they hold themselves up to be holier than thou...all the pomp and bullshit that goes with the whole persona.
Put a wig on your head and instantly you are above all others...what they really do is pursue people for opportunistic brand building and financial gain...end of story.
And...they are political animals.
If you got to the Australian Electoral Commission Donor Reports and have a look at how much money some of the very big class action law firms channel into the Australian labor Party, it would make your eyes water.

and they think they are pursuing class actions to hold companies to account as they "pursue justice". what a disgrace, the plaintiffs get virtually nothing because the pigs are in the trough, they put an ad in the afr, get an unsuspecting disgruntled shareholder, they then nominate them as the lead plaintiff, get a litigation funder and the rest is history.

the company pays out, the money is chewed up in either legal fees or to pay the litigation funder, the plaintiffs walk away with $500 or less.

the biggest game in town, purported by the biggest crooks in town. if I didn't have a conscience, I would do an easy and pathetic law course then set up a shingle, "you can get more with me", no win no fee.

Hayne is from this stable. one of their own. never forget that. PIG.

to be a lawyer, you have to pass a legal exam and fail an ethics exam, and shame your family in the process, by becoming a lawyer.

Affordable advice has nothing whatsoever to do with the number of advisers. The advice affordability problem is caused by expensive, overly complex, regulation. No matter how many new graduates come in, regulatory overheads will prevent them from providing advice that is affordable to most consumers.

Fix the regulatory cost problem first, which will fix the advice affordability problem, then plenty of new entrants will be attracted to meet increased consumer demand.

Agree 100% , I have three sons that I wanted to be planners, I brought a small share in a business and built a good client base myself with this plan in mind, but at the moment with the amount of stress I am under and the uncertainty surrounding the overly complex laws and oversight of asic that just hates us, I would never, ever recommend they follow in my footsteps. Its very sad and I know a lot of others that feel the same. We need to go back to square one, there is just too much paperwork needed to service or onboard clients these days. We also have all these organisations clipping our ticket such as the TPB for example. The thing is we only do all this extra fasea paperwork to cover our asses with ASIC, the very people we pay a levy to. I mean telling clients it costs $300 to get advice on withdrawal of super, I mean cmon they are setting us up for a fall there. The clients would not give two hoots if we did a strategy file note or a best interest checklist. Clients just want honest decently priced advice. Our so called professional organisations are weak as , we have no respectable voice in the media, we have people that are unqualified cutting our grass every day of the week, we compete with planners working for massive cashed up loss leaders like industry funds. Really who in their right mind would be a self employed planner? I am only still here as I really want to make a difference to peoples lives. I sat the stuffed up exam, did the bridging courses, recently completed the ethics course that was the most cobbled together piece of crap I have ever had to read and I learnt absolutely stuff all. Even though I am starting to hate my job due to the above, lucky I still love my clients, but no my boys will not be following me the way things are at the moment.

Given the supervision requirements during the Professional year for new entrants, how is this even "remotely" (and i use that word deliberately) given current social distancing requirements?

An exam that has no structured course material or feedback is not fair. I have 2 degrees including a masters in financial planning and have an excellent GPA. I worked my butt off for the exam. I found the questions tricky. I also have issues with having to correctly answer a series of questions for a single mark harsh at best. I failed mine and the feedback also lacks fairness. Is this test meant to eliminate people. Why doesnt FASEA make a relevant course available? Or is it about the conflicted remuneratiin they receive for resits and remarks??

All $600K of resit fees & counting (over 1,000 advisers have failed to date & they will each have to pay the full $594 to re-sit the exam).

In 20 years I've guided clients through many market meltdowns. I'm finding this one is not even that bad in comparison. but I'm working my butt off now during this current market downturn and I'm carrying the weight of clients worries on my shoulders. IWhilst I'm only in my late 40's I've made the decision that I don't want to be around for the next one. I've passed the exam and met all FASEA requirements but I think you'll find many experienced advisers will say there are only so many stock market crashes you can go through. I do believe the years ahead will be the best for those willing to hang around and that's because of how many will be leaving.

I am a CPA but worked mostly in the Public sector as a tax investigator. I decided to complete a Diploma in Financial Planning at Kaplan Professional. I can’t get a job in the field. I need 12 months of working as a FP. A few years ago I was asked to buy a book of business for $400,000. How could I do such a thing if I had no practical experience? I fell my study was a waste of my time and resources to get into a sector that’s broken.

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