Five ways the advice exam could change in the future

Money Management collates the recommendations of major associations and how they would like the financial advice exam to change.

The consultation closed submissions on 10 January, and the Financial Advice Association Australia (FAAA), Financial Services Council (FSC) and Stockbrokers and Investment Advisers Association (SIAA) were among those who made submissions.

Five ways that the exam could change if all the recommendations are implemented:

What do the questions look like?
This was the biggest agreement between the organisations, with all believing multiple choice questions would be a worthy change to the exam. They also called for the scrapping of written answers or questions that require the “most correct” answer as these are subjective responses.

The FSC said a move to multiple choice questions would reduce the need for paid staff to mark exams in favour of an automated process, and reduce the cost of onboarding new entrants which would have the knock-on benefit of reducing the $1,500 cost to sit the exam.

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“Arguments that multiple choice questions somewhat make it ‘easier’ for students to game the exam are without foundation. Multiple choice exams can be appropriately set and rigorous. Given the proposal requires at least 70 questions, we view this as adequate to test such knowledge rigorously without diminishing education standards.”

At the FAAA, the organisation said multiple choice questions would bring costs down and reduce the time taken to issue results, while the SIAA said it already conducts exams in this way online that can generate results immediately. 

Who can sit the exam?
The associations would like to see changes to the eligibility of who can sit the exam to make it possible for candidates to sit it during their studies rather than only during the Professional Year (PY). Currently, a candidate must be an existing provider or a provisional relevant provider who is already on their PY.

“Allowing PY candidates to sit the exam prior to completing their qualifications, by removing the current requirement that only relevant providers can sit the exam, will offer prospective advisers much-needed flexibility in their penultimate years of study,” the FSC said.

The SIAA stated: “SIAA strongly supports removing the current exam eligibility criteria which restricts access to the exam to those who have already met the qualification standard or who are existing providers.
“The timing of a candidate’s movement through the quarters of the PY should not be bound by an exam timetable but by their progress.”

The FAAA and SIAA both went further and suggested there might be other professionals not on a PY who might benefit from sitting the exam. 

“It also excludes other people in the financial advice sector who might benefit from completing the exam, such as AFSL responsible managers, compliance managers and so on. We see no basis for limiting who can sit the exam, and suggest that any person who wishes to do so should be able to attempt the exam,” said the FAAA.

“It will also open up access to the exam to a larger cohort of people. Firms will be able to encourage back office and middle office staff to sit the exam, thereby increasing the pool of potential PY candidates,” added SIAA.

When can they sit the exam?
Currently, there are only four sittings of the exam held remotely per year, which can cause delays to PY proceedings if an exam is fully booked or a candidate needs to resit. If they fail to pass, it can be several months before a new sitting, which delays the time before they can go before clients and potentially increases cost for their employer.

The FAAA previously shared with Money Management that candidates were taking up to two years to complete their PY while they waited for exam slots.

“The FAAA favours changes to the exam process that will give students greater flexibility and control over their academic careers, such as allowing candidates to sit the exam while completing their tertiary studies.”

SIAA suggested the exam should be available on request or on a rolling basis, a change that would be easier to implement if the aforementioned multiple choice questions were introduced.

When do they get their results?
It can take six to eight weeks currently for a candidate to receive their results from the exam; the associations felt this could be significantly speeded up or automated to provide instant results.

In the last November exam, results were released in mid-December and had a pass rate of 66 per cent, with 145 out of the 219 candidates passing the exam.

The FAAA said: “The time taken to provide results and the consequences of failing the exam and being unable to move on the second half of the year of the Professional Year are problematic, potentially extending the Professional Year well beyond 12 months.

“Timeliness of results is also very important for new entrants sitting the exam, which is a prerequisite for them moving on to the second half of the Professional Year.”

What feedback do they receive?
The SIAA called for more tailored feedback, which should be provided to unsuccessful candidates, to assist them in working out how they can improve in their next sitting. 

“Currently, exam feedback is not individual but generic. All it does is repeat the curriculum item relating to the question that the candidate has failed. It does not tell them why they failed that question or what particular matters they should study to pass the question at the next sitting.”

The FSC and FAAA had no comment in their submission about feedback.