Should aspiring advisers complete the exam before PY?

Industry commentators have discussed the benefits of ticking off the ASIC adviser exam and gaining entry-level experience prior to commencing their professional year (PY).

In January 2024, the corporate regulator removed the requirement that only existing providers or those who completed an approved degree could sit the financial adviser exam. Following the legislative amendment, there are now no restrictions on who is eligible to sit the exam.

As a result, this has allowed new entrants of any background to consider sitting the exam before starting their PY.

This meant the pass rate for the latest exam sitting in August dropped lower to 62 per cent due to the wider range of candidates who sat the exam after reaching as high as 73 per cent in August 2023.

Fourth Line CEO Joel Ronchi recently said: “Now, because of the way they’ve opened it up, there’s a lot more people thinking: ‘Maybe I’ll knock the exam over early’ because they see it almost like the low hanging fruit. Once it’s done, it’s done.”

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Speaking further with Money Management, Ronchi weighed up the benefits of aspiring advisers passing the exam before commencing their 1,600 hours of structured training.

“A lot of people are now thinking about doing the exam before starting their professional year so they can get through the PY without any holdups. There’s that kind of mindset that’s coming into it now,” he explained.

“If I owned a financial planning practice and I had two people to choose from, with the idea that both of them would ultimately go through their PY, and one had already done the exam and one hadn’t, I would probably go with the one who has done the exam because it’s one less hurdle.”

While completing the adviser exam before starting the PY can be a “strategically smart move”, Ronchi said, it is largely dependent on the amount of experience one has already gained working in the industry.

Money Management spoke with Yin Wang, who has spent four years at industry superannuation fund HESTA as a member engagement consultant providing general advice to members, and passed the exam in June.

She completed a graduate diploma in financial planning and is planning to apply for her PY next year.

“I found the exam reasonable and not overly complicated. I’ve been working in the advice industry and dealing with members’ superannuation strategies every day, so that made it easier,” she said.

“I thought I would just do [the exam] and then I’ve got one less thing to worry about. I feel like you don’t have to do the PY to do the exam, but you do need some industry experience. It’s harder for people if they haven’t worked in financial planning to take the exam.”

Having both her studies and the exam under her belt is especially important when working at a large super fund, Wang added, where applying for the PY program is more competitive compared to working in a small advice practice.

She continued: “Because I’ve done a degree and passed the exam, I’m in a good position to apply for the PY in the future. If you’ve already passed [the exam], that’s one thing ticked off the list.”

A panel at the recent Striver Brimstone event in Sydney also discussed why it is beneficial to have entry-level experience before applying for the PY to ensure a greater chance of being accepted.

Echoing Wang’s comments about super funds, Brett Saurine, comprehensive advice manager at UniSuper, told an audience of students: “What you’ve got to think about is entering into this world [does not mean] straight away being an adviser, and I hate to break it to you, but it might be in a call centre, might be doing administration.

“That was the way I learnt and I think it was wonderful – that’s how I got opportunities. To think you’ve done your studies and then straight away necessarily you’ll get a professional year – that could be challenging.”

Saurine encouraged future advisers to find a firm that will offer clear career progression and to put “your best foot forward” in eventually commencing the PY program.

Also speaking at the event, Rachel Bell, training and relationship manager at Sustainable Life Solutions, said the PY candidates that were most successful were the ones who worked at the practice for several years prior.

She commented: “The ones that didn’t do that, who jumped straight into the PY, were less successful. Go in and get a role which is going to be really good grounding and then you can enter your PY. It could be a three- to five-year journey, and that will really set you up.”