Why did August’s adviser exam see a lower pass rate?

While the August financial advice exam saw a lower pass rate compared with previous sittings, this expert believes it’s for a positive reason.

On 6 September, ASIC released the pass mark for the recent advice exam held last month.

Some 231 people sat the exam, including 170 who were sitting the exam for the first time. The pass mark was 62 per cent, representing 143 candidates.

In comparison, the March and June sittings in 2024 both saw 70 per cent of candidates pass the exam. August’s result was the lowest percentage of candidates who have passed since November 2022 when only 57 per cent passed.

Speaking with Money Management, Fourth Line CEO Joel Ronchi explained why this may be the case.

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“Up until the end of 2022, everyone sitting the exam was effectively an existing adviser or someone in their professional year. Now in January of this year, ASIC opened up the exam to anyone who wants to sit it,” he explained.

Earlier this year, ASIC confirmed it would be incorporating legislative amendments to the financial adviser exam, with the March exam reflecting the changes.

On 14 December 2023, the government first announced draft legislation to amend the adviser exam, including:

• Removing the short answer questions from the exam and increasing the number of multiple choice questions.
• Removing the requirement limiting exam participation to new financial advisers who have completed an approved degree and existing providers.

Regarding the latter statement, ASIC said at the time: “Removing this restriction provides flexibility for candidates to sit the exam at an appropriate time. For example, potential new entrants could sit the exam while they are completing their studies.”

This change, which has allowed a wider range of candidates to sit the advice exam in 2024, is likely one of the reasons why the August pass rate was at a lower percentage, Ronchi said.

“The people coming into the exam [now] might be a different type of person. Instead of it being someone who’s been a practitioner for three years or whatever it might have been in the past, some ex-advisers are sitting the exam, compliance people who want to open up their career options are sitting it, associate advisers, client service officers – all the peripheral support staff are now saying: ‘I don’t need to wait until my professional year to do the exam’,” he 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.”

The next exam will be held on 7 November, and indicative dates for exams in 2025 are on 6 March, 5 June, 7 August, and 6 November.

Looking ahead, Ronchi is optimistic that 2025 will see a greater number of ex-advisers re-enter the industry thanks to the experience pathway, which enables those with a decade of experience or more to continue advising without the need to hold an approved degree.

ASIC previously stated that existing providers who seek to rely on the pathway will need to make a declaration and provide it to their licensee before 1 January 2026.

“Whatever can be done to potentially encourage that [ex-adviser] cohort to come back in; that’s the quickest win. The more people can talk about that and the more the licensees can encourage that, it will be fantastic for everyone,” the CEO added.