Pressure for adviser exam cost reduction ramps up: FAAA

The Financial Advice Association Australia (FAAA) has joined the collective push for a reduced fee to sit the financial adviser exam.

Following the government’s proposed changes to the exam’s delivery, the FAAA has shared its support for the impending amendments.

This will see the removal of short-answer questions and erasure of restrictions on who can sit the exam to ensure a more flexible process.

“The FAAA is in favour of wholly multiple choice examinations. Moving to this format rapidly speeds up the process of marking the exams and ensures consistency of assessment without lowering standards,” said Sarah Abood, FAAA chief executive.

By automating the marking process, the risk of human error will be removed and students’ results will be provided at a faster rate, Abood added.

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“This method of assessment is also cheaper to run, and we would expect to see a reduction in the cost of the exam as a result. The cost is now $1,500 per attempt, almost three times higher than it was when the exam was first introduced in 2019.”

Last week, the Stockbrokers and Investment Advisers Association (SIAA) also expressed its expectation of a reduction in the exam cost.

“Once the proposed changes are implemented, the cost to the exam provider should reduce significantly and this should be passed on to the exam candidates in the form of a lower exam fee,” SIAA wrote in a Treasury submission.

The FAAA also backed the change which will enable professional year students to complete the exam during their studies.

“Exam infrequency and the time taken to receive results has meant the professional year could stretch well beyond 12 months for some students. This increased flexibility is very welcome and should reduce unnecessary delays for new entrants in starting their careers,” the CEO continued.

“The proposed changes will also effectively allow anyone who wishes to do so to take the exam. This is a strongly positive move as there are many participants in financial services who have an interest in the content and in demonstrating mastery in this area – such as compliance staff and responsible managers, just to name a few.”

The FAAA previously called for greater flexibility in the exam schedule, with only four sessions scheduled in 2024, starting on 26 March after being delayed.

Meanwhile, the industry body also announced its priorities and expectations for this year. Abood expects 2024 to be a “watershed year” for the advice profession as more positive changes are delivered.

“It is the year when clarity and certainty about the provision of financial advice should be delivered, both to financial advisers and to Australians who can benefit from their advice.”

Ensuring advice is easier and cheaper to provide is its first focus. To do so, the FAAA is calling on the government and regulatory bodies for further detail on the Quality of Advice Review implementation.

Re-engaging with consumers is the second priority for the FAAA to improve the understanding amongst Australians of the value of seeking an adviser.

Finally, growing the profession remains a key concern following the mass exodus of advisers in recent years.

Abood continued: “We need more great advisers, and to achieve that we need to get the message out there that financial planning has a really attractive career path.

“There is no reason that we can’t reach more than 100,000 financial advisers. There are around 200,000 registered accountants in Australia, and the need for financial advice is just as significant.”