Advice association calls for scrapping of adviser exam
The Advisers Association (TAA) has called for the financial adviser exam to be scrapped, arguing it has served its purpose and is an unnecessary expense.
The exam was first introduced and run by FASEA following the Hayne royal commission and later moved over to being run by ASIC. It was required for advisers to pass the exam, initially by January 2022 and later extended to October 2022.
TAA chief executive, Neil Macdonald, said: “The real purpose of the exam, which financial advisers first sat in 2019, was to establish a level of professional competence in the overall population of Australian financial advisers at the time, many of whom did not hold the new FASEA recognised tertiary qualifications.”
He said new advisers entering the industry were already tested via their tertiary qualifications which meant the exam was unnecessary for them.
“In essence, there will be no advisers whose competency needs further testing. The exam therefore becomes an unnecessary additional expense for those wanting to enter the profession, who have already heavily invested in their education.
In its most recent sitting, the pass rate was 73 per cent of 205 candidates which was the highest since ASIC took over its management. This was higher than the pass mark of 63 per cent in the May exam and 67 per cent in the February exam.
The cost to sit the exam in 2023 is $1,500 per sitting, up from $540 plus GST in 2020, although is wholly run online which was a change brought in at the start of 2023.
"In addition to the financial cost, the requirement to do the exam and the timing of available exams makes it harder for people to do their Professional Year. These requirements are creating further barriers to entry at a time when the profession desperately needs new entrants and consumers want access to affordable, personal quality advice,” he said.
The exam has been the subject of heavy criticism, particularly when it was run under FASEA, with many candidates needing to sit the exam multiple times despite having a long record of work experience.
The failure rate was so high at one point that the former Association of Financial Advisers chief executive, Phil Anderson, called for "compassion not condemnation" towards advisers who had failed.
Speaking in June 2022, Anderson said: "One thing we want to be clear about is we think a lot of advisers in that category are really good advisers. But they have struggled with the exam and that might be because of mindset issues or exam technique, it doesn’t mean they don’t know their stuff.
“It’s been really challenging and has threatened their self-esteem, they are ashamed they have not passed the exam.
“We see all the comments on the trade media, condemning people for not having passed and I ask that we show some compassion and we help if we know people are struggling with it. You may just be able to help them with their mindset or their exam technique.”
AUTHOR
Laura Dew
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
Scrap it? Nohhhh, lets keep it going all the way through to Christmas so ASIC can fund their staff Christmas parties and maybe even some of the ASIC Senior Exec overseas Christmas holidays!
This was never about ethically cleaning up the industry. If it was, specific feedback would have given to candidates who sat the exam and failed - not the general feedback they got that led them to making NEW errors for questions they had already answered correctly in their previous sitting.
Also, how ASIC can justify without shame the reasons for increasing the fee from just under $600 to almost $1,000 to what I last heard was $1,500 is a mystery and utter disgrace!
There is no disputing ASIC has blood on it's hands for how it handled this and how it led to numerous advisers taking their own lives after failing this farcical exam 4, 5 & 6 times. No, I reckon if they're going to screw the advice industry over like they have to date, they may as well ride this baby all the way home so the industry is a completely on its knees.
Regarding the call from TAA to scrap the National Advisers Exam, I was one of the advisers who passed the FASEA run exam at first attempt but left the exam room shaking my head over the content that failed to actually test technical competency.
The questions were so far left field with questions on the labelling of ethical dilemmas not matching what was in the post grad accreditation course on professional standards to lose credibility.
My sympathy was with advisers who were not successful in the FASEA exam. The exercise was an expensive and prejudiced view against financial advisers when compared to other professions.
In particular the legal profession’s behaviour where gold plaiting and abhorrent fees makes the highly regulated world of financial advice, pale to insignificance when ethics are considered.
Not expecting the 'site administrators' to approve my comments. Industry body websites like this aren't interested in publishing the REAL opinions advisers have - just the sunshine & rainbow opinions. (Prove me wrong!)
Here we have another idiot who doesn’t get what a profession is all about. A profession has professional standards that include reaching and then continually maintaining those standards. Professions such as CPA have qualification requirements in addition to a university degree.
These associations purporting to represent advisors must be in the pay of the unqualified or the average . 73% is barely a credit.
The board of the TAA needs to think seriously about getting a new CEO of the Association.
I agree the exam is rubbish when looking at what we do day to day but what of the advisers that have done it and a degree? Can we be compensated for the absolutely awful time we had to go through to satisfy people who know nothing about what they are asking us to do and those putting it together making lots of money on our pain?
What this useless exam did do was decimate a wonderful industry costing advisers their livelihood homes and yes in some extreme circumstances their lives
Advisers who for decades has a clean record and served their clients admirably with a fiduciary duty brought on by their own good intentions Not drilled into them with threats are lost to the pressures of this ridiculous test of there character It did not achieve anything constructive
12,000 adviser gone and not coming back under the current conditions