Advisers are divided about whether industry colleagues who have twice failed the FASEA exam should be able to continue practising next year, with a slight majority rejecting the measure.
An Adviser Ratings poll asked the question in November, garnering hundreds of responses from advisers. More than 60 per cent said they were not in favour, while 39 per cent said they were in favour.
The poll follows the lifeline from Treasurer Josh Frydenberg and Minister for Financial Services Jane Hume earlier this year, which granted advisers who have twice failed the mandatory exam an extension, to September 2022, to complete it successfully (now confirmed as October 1, 2022).
At the time of the announcement, Senator Hume said the measure was introduced in light of the COVID-19 pandemic.
“Today, acknowledging the effects of a 1-in-100-years pandemic and the disruption it has caused to lives and businesses, the Morrison Government has announced very limited changes to FASEA exam requirements,” she wrote on LinkedIn.
“For those who have made two genuine attempts to pass the FASEA exam and were unable [to], there will be a one-time, limited extension into next year. There will be at least one further opportunity to pass the exam offered in 2022 for those who qualify for the exemption.”
Senator Hume said the extension would be given only to advisers who attempted the exam twice before the end of 2021.
Not all advisers were happy about this move, given thousands had studied and passed within the original timeframe.
The state of play
At the time of writing, almost 17,000 advisers had passed the FASEA exam, which represents roughly 90 per cent of the active industry, Adviser Ratings analysis shows. More than 19,000 advisers have sat the exam at least once.
Most of the advisers who have passed the exam are practising: 14630 are active advisers on ASIC’s Financial Advisers Register (FAR); 1840 are recorded as ‘ceased advisers’ on the FAR and may be reauthorised; and 360 are new entrants, FASEA’s latest update states.
FASEA has also reported that roughly nine in 10 people who have sat the exam have passed it, which it said “reflects that the Exam is an achievable exam for competent relevant providers, regardless of their area of specialisation”.
Even so, almost a third of the advisers who sat the September 2021 exam had attempted it unsuccessfully in the past.
Among those who underperformed on that September 2021 exam, one area commonly needing improvement was financial advice legal and regulatory obligations, including Chapter 7 of the Corporations Act. Other areas of underperformance among those who failed included ethical and professional reasoning and the context in which financial advice is given and requested and how that affects decision-making.
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Comments27
"While almost the entire FASEA fiasco has been a blight on our industry, not everything has been a failure. Discussion around the FASEA exam is in some ways reminiscent of the opening scene to an early-70’s martial arts film. We are all screaming at the wizened old monk, asking him what he hopes to achieve by getting us to carry water up a hill in a bucket with a hole, while blindfolded. “When you understand the task I have set, Grasshopper, only then will you be ready to swim in the lake!”. With apologies to Buddhist mysticism, in FASEA, as in ‘Kung Fu’, it is the task itself that is the challenge, not necessarily the answers. When professional advisers need to step up and prove themselves, albeit by passing an exam which many may believe has little perceived relevance to the provision of day-to-day ethical advice, some will not pass muster. Potentially they fail to see that it is the task of committing themselves to passing the exam, as much as the answers to the questions, that matters. Many professions, including the military, have rigorous selection and qualification process where recruits are subject to tedious tests and trials with no apparent connection to command or career. What these help determine, however, is whether these aspirational leaders have the capacity to commit themselves to the nominated task, especially where it may be perceived as pointless, because it is a measure of their commitment to the larger objective. “So, Grasshopper, if you fail the exam twice, don’t try to swim in the lake. Take a shower.”"
Max 08:50 on 02 Dec 21
"Fantastic comments from "See You Later Above", thanks for sharing such insight. I wish you all the best for your retirement & hope the younger generation can carry the baton forward for you. Leopards don't change their spots, just because they pass an exam. Like any profession it is the knowledge, experience & client testimonials that make a great advisor. Barely a day goes by without comment in a leading paper regarding the complexity of advice and how it has become too costly for those that really require it. I have practiced as an Accountant for over 20 years but this is a whole new ball game!! Particularly when we already have our own Professional Code of Conduct (Professional Bodies and TPB) that we must comply with & each code has its own idiosyncrasies. Just hoping I have passed on my most recent attempt."
Fingers Crossed 09:26 on 25 Nov 21
"Why should you lose your livelihood for an exam that is not a test of your financial planning capabilities with questions like what is the best answer and test cases that have never occurred in my career and will never occur. It is a legal exam only. If I want legal advice I will look it up or seek it out ! If clients are not getting properly serviced they will change advisers ! Get real !"
birmie 09:21 on 25 Nov 21
"I would encourage everybody to re-read the comment by Andrew Holmes. I don't know Andrew but in my opinion he comes closer than anyone here in summing it all up accurately and poignantly. Here's the last sentence or so he writes: "I do agree with the increased education requirements but this absolutely missed the mark. It is wrong to take good advisers out of an industry because some bureaucrat dreamt up this rubbish." - I would add that the bureaucrat would have zero experience in the field or any part of a practical application of the test material. I would be fascinated to see their qualifications too - have they every sat and advised a client? Important point this and no media people are asking it out loud. Too sad for words . . . Andrew Holmes"
Brian Howard 23:22 on 24 Nov 21
"It takes a special type of person with heightened intuition and a deep understanding of technical analysis and years of technical study to come up with advice on stocks,options, trading commodities, currency spreads,etc, This exam of which I sat this November has nothing to examine the ability of an adviser to give such advice. Ethics and complaisance should be left to the compliance department."
Alex Papas 19:12 on 24 Nov 21
"After reading all of the comments, I have to have a say. Some people took the time to write intelligent, well thought out comments - Esther A, Paul F, Jeremy W, Mary K, Andrew H, and Venesa W. It is interesting to note that all of these people have passed the exam. Congratulations and all the best to you going forward.Then we have comments that are brief, plain thoughtless and ignorant. Craig: Really, "go find another gig" That is just an insult. David K: Seriously, what planet are you from? So after practicing in risk insurance for 35 years without ever failing an audit and zero complaints from clients, I all of a sudden need to know A to Z of regulatory requirements, including when I might get suspended or fined or go to jail, or I can't practice anymore. It's a joke. And Les B, you take the cake mate. "How can the industry move forward?" - I'll tell you how the industry can move forward. Firstly, recognise experience, good ethical conduct, product knowledge and testimonials from clients instead of judging a person by their ability to pass an exam that has nothing to do with what advisers, especially risk advisers, do on a daily basis. Leopards don't change their spots. The bad eggs out there won't all of a sudden become ethical just because they have passed an exam. I didn't sit the exam, because I have sold to 2 good young guys who will treat my clients in the way they deserve, and provide them with great advice in the future. I am so glad I am at retirement age and can move on. I wish all the best to all of the advisers who are still in Limbo. Of course you should get as many goes as it takes!"
See you later 19:10 on 24 Nov 21
"From the stockbroking side of the industry I thought the FASEA one size fits all exam was inappropriate. The deliberately wide scope of study requirements was very offputting. I considered myself lucky to pass first up, sitting the exam in the expectation of doing better next time with more study. I sit with colleagues for whom English is a second language. I see what they contribute to the industry (one in a specialised area) and the work they have put into studying for the exam to little avail. That people would suggest they should leave the industry because of two failures suggests they haven't thought through their positions. I am concerned for another colleague who may have issues with mental health, these exacerbated by the additional pressures put on them by the study requirements. Seems to be an adequate adviser. The exam will do little to weed unethical people out of the industry. This looks to me to be a political exercise with no care for the damage done or the expenses involved. For many those expenses will be easily absorbed, for others they will be a strain. I genuinely doubt clients will benefit and they will be unhappy about paying more in brokerage for those notional benefits. Okay, that's off my chest. Now to stir the pot. Should advisers apparently lacking any empathy for fellow participants in the industry consider another career, something not involving client contact?"
Graeme 18:42 on 24 Nov 21
"I undertook my first exam in 2019 with the attitude of taking it as a practice exam and managed to pass. I might subconsciously know that info from past studies and CPD, have great luck or both. The questions were ambiguous and unconscionable in their format. The exam experience was undignified and humiliating. I hope it has improved since then. I believe that it's a massive loss to us advisers and the community at large that so many of our colleagues who are professionals, know their stuff and have been role-models and mentors for us are being forced out. Passing an exam is not an indication of one's ability except their ability to pass an exam. Woopee! Any suggestion to further humiliate advisers who are already being forced out of their life calling by exposing their marks, attempts or other cruel suggestions is mean-spirited and nasty especially that all us 'Genius' who managed to pass are going to have more clients than we can manage over the coming years. As anyone who really understands professionalism knows, it's not purely judged by passing an exam or having a degree. There are plenty of other behavioural indicators to judge one's integrity and trustworthiness to provide advice. Just as well many of them haven't been included in the Corporations Act or Code of Ethics ......."
Esther Althaus 17:42 on 24 Nov 21
"Well, I failed three times and finally passed. Does it make me a bad advisor . No, it doesn’t. It is a hard exam regardless of how you look at it with little or no feedback. Also incredibly stressful to think a 3.5 hour exam is more important than 8 units at 120 hrs study! Go figure. For those who are thinking , my god this guy is thick. Not at all. I have a bachelor of education, a diploma in teaching and several other diplomas and been in this business for 23 years. I love Sally Dixon’s comment which I will let go through to the keeper as it isn’t worth talking about. Funny that. "
Greg 17:37 on 24 Nov 21
"As a 74 year old whom passed on my 3rd attempt I would counsel students who passed to give older advisers a fair go as they have the experience to overcome the "dramas" being played out since the GFC and now the Corona virus. Help them to find a way through the exam syllabus and they will reward you with knowledge and experience you may not be aware of, particularly as there may be difficult times still ahead."
paul franklin 17:02 on 24 Nov 21
"I failed it twice and passed on the third attempt. I'm a Risk Adviser 100% and there was a majority of questions aimed at Financial Planning, so I feel I was under the gun a little bit. I know financial advisers who have failed twice. The big problem with the exam was you didn't know if you passed or failed by 1 mark or 20, and the pass mark was a Credit not a Uni pass. The exam doesn't make anyone a better Adviser, it was the Idiots in charge of the Nut House."
Mr Damian Eales 16:05 on 24 Nov 21
"Australia and most of the western world, has followed a trend where theory based education is of utmost importance and experience with decades of practical knowledge that will actually help clients, is the poor third cousin. Ask any Australian who is over 30 if they would prefer advice from an Adviser who has actually lived through and learned from real world events over many years, or if they would prefer to take advice from a highly educated Adviser with little experience and the answer is mostly always for the experienced Adviser. The feedback from nearly everyone who sat the exam, was it was confusing and bore little resemblance to the real world of advice, so what actual benefit has it provided? Unethical Advisers could pass the exam, so there is no protection for clients there."
Jeremy Wright 15:59 on 24 Nov 21
"100% of advisers that have passed the exam don't believe that others should get a 3rd chance. 100% of advisers that have failed twice believe that they should get a 3rd chance. I failed 1st time - I walked out of that exam room thinking I had smoked it few hard questions I had done a fair amount of study (for my 1st exam in 20 odd years) but reckon I had it nailed - how was my surprise when I get "F" WTF did they look at the wrong paper or something - but no feedback. I sat the most recent Nov exam after doing a lot more study - it was tough I have no idea if I passed the questions were tricky with a lot of "best" answer options and a lot around Values of the code - this doesn't make me a better or worse adviser it ticks a box and says I can practice or not."
I failed the first time 15:54 on 24 Nov 21
"First they say they will not be changing the rules, you must have passed before 1 Jan 22 there will be no extensions. Oh well there are a few who are struggling, let’s give them a chance to keep their book a little longer. Is there going to be another extension next year? Will they relax the education requirements? It is anyones guess!"
John 15:48 on 24 Nov 21
"The hype around this exam was off the charts, our firm provided training, basically all you had to do was run through a practice exam, check the answers a reverse manage responses, as one responder said- the dodgies will have been first to sit-know how to play the game and are still out there ripping clients off -it achieved nothing. That said if you cant pass it in two attempts -go and find another gig "
Craig 15:22 on 24 Nov 21
"perhaps we shouldn't all be judgmental on those that failed .As I was one of them. does that make be a bad advisor no it certainly doesn't. one doesn't want to make excuses, but personal matters don't help, and the whole exam was a joke, as you dont get feed back , so how do you know where to actually study to improve. i have the most amazing licensee who has supported me throughout this, he also didnt pass first time, if he didnt think I was worthy of my license he would let me know . Failing isn't about bagging, who failed their driving test,? I'm sure some of you did, were you criticized for it . "
mary kehely 15:22 on 24 Nov 21
"If you can’t pass this exam after 2 goes, it is highly unlikely a third will make a difference. Having said that, the number of goes an adviser took to pass the exam should also be noted on the ASIC website. Not sure how other people feel but I personally would not want to go and see an adviser who has trouble understanding the regulatory and other requirements of our profession. How well does he/she understand tax law or super legislation or aged care or insurance if he/she can’t pass one exam?"
David Khenkin 15:10 on 24 Nov 21
"I don't want to be too critical, but the 7 people in our office all passed the first time, and, while studying and sitting formal exams is challenging, so is being a financial adviser. Maybe they need to find another career, maybe work in a support role to improve skills and knowledge, and then try again in a few years?? "
David 15:05 on 24 Nov 21
"I have completed much study and many exams during my life (Degree, CPA, SMSF Professional and Financial Adviser) and I can honestly say that this exam was by far and away the most confronting of my professional career. I passed first time, but the reality was that I was lucky. Ethics isn't a subject you can teach. It is a value that is instilled in us as children. The dodgies would know the answer to many of the questions and will still be practicing. I do agree with the increased education requirements but this absolutely missed the mark. It is wrong to take good advisers out of an industry because some bureaucrat dreamt up this rubbish. "
Andrew Holmes 15:05 on 24 Nov 21
"It concerns me that anyone that failed the exam twice would be allowed to continue in practice. If they do what was the point of he exam and how can the industry move forward with advisers who do not have the basic knowledge requirements? "
Les Batchelor 15:05 on 24 Nov 21
"Everyone who passed found the time to study and pass. This cost time and money. Why should those who fail be given spacial treatment. Not everyone who wants to be an adviser can be an adviser. Having said that, the exam was a big waste of time."
Ben 15:03 on 24 Nov 21
"Not sure I'd call 61% to 39% a slight majority - seems fairly convincing to me. "
Peter 14:54 on 24 Nov 21
"This Exam is not difficult to pass that is true, so many have passed the first time round. However, I have seen advisers who are undoubtedly well educated and extremely intelligent in the area of advice along all the parameters faced with the prospect of this exam ending their career become affects and stressed by this test. I believed I would fail and my friends who are advisers also believe the same thing but we all passed first time. My father had the same thought and he has been in the industry for 40 years we all passed the first time we sat it. I think those that passed are being rather harsh on their colleagues. However, i also believe that FASEA not allowing or giving advisers feedback on where their knowledge or explanations of knowledge cause them to fail is unfair too . At university if you failed an exam or assignment your lecture would sit with you and tell you where your understanding is lacking so you can work on it. This is something that FESEA does not do they give you a pass or fail and then tell you nothing more. "
Venesa West 14:53 on 24 Nov 21
"And what about those who had the exam deferred up to 3 times due to covid lockdown cancellations in 2021 through no fault of their own where is the procedural fairness in that process . maybe its one of the many reasons these muts will cease existence in jan 2022 but their damage is already done "
peter warren 14:51 on 24 Nov 21
"I barely studied and passed first go. It's not that hard. Those who are trying hard and failing twice probably aren't the people we want in the profession."
Glenn 14:49 on 24 Nov 21
"This was a stupid exam to begin with, with really badly worded questions and a scoring system under which its impossible to get a representative score. Add to that, anyone with medical issues had to advise as such about 7 days before the exam, and couldn't get a refund if they were sick on the day, so many candidate would have sat the exam while they weren't well. Well done to all of us who managed to get through this fiasco, but I strongly urge the gates to be left open to any who haven't yet got through!!!!!"
Mary Benton 14:45 on 24 Nov 21
"those who have failed twice maybe you should consider not allowing those that got 50% or less not to practice in 2022 and give the others another chance. If they fail a third time then i guess they can't practice"
sally dixon 14:41 on 24 Nov 21