Financial adviser numbers are expected to dip once again as the final exam sitting for those who have twice failed approaches, but it could be one of the last significant reductions in the adviser workforce. ASIC confirms that only fifty-two per cent of the participating advisers have passed the most recent adviser exam.
Adviser Ratings expects several hundred advisers to depart next quarter, but for recent stabilisation trends to continue after that.
For the past few quarters, the exit rate has slowed substantially, while the number of returning advisers has increased. Meanwhile, our analysis shows thousands of ceased advisers could be marked as ‘qualified’ if the government changes the legislation to recognise advisers with more than 10 years’ experience and an unblemished record.
In the interim though, the exam is expected to put a dent in industry numbers. From the 16,344 advisers currently active on the Financial Advisers Register, only 15,800 advisers are reported to have passed the FASEA exam, which means that there are still close to 600 advisers who need to come off the register by October 1st. Alternatively, the 2,500 advisers that have passed the FASEA exam but have ceased, may be re-authorised in the future.
Adviser Ratings previously revealed 61 per cent of advisers thought an exam extension should not be provided for their industry colleagues who had twice failed.
Figure 1 – Poll of financial advisers about the exam extension
Source: Adviser Ratings. Poll conducted November 2021.
However, several advisers stressed the circumstances that result in people failing can vary greatly, with some referencing COVID-19 disruptions and others citing health challenges, including mental health.
Changes ahead
As the door closes for advisers who haven’t passed by 30 September, the newly elected federal government has opened consultation on its commitment to streamline education requirements. However, Assistant Treasurer and Minister for Financial Services Stephen Jones ruled out a further deadline extension for existing advisers yet to pass.
For future sitters, Treasury will look at whether the delivery can be improved, but noted in a consultation paper that the exam itself is here to stay.
“I continue to support the exam as a benchmarking tool that tests the practical application of a financial adviser’s knowledge, including on regulatory and legal requirements, and ethical reasoning,” Minister Jones said.
The current delivery of the exam has long been a subject of contention. Several advisers told us the lack of feedback made it difficult to identify areas where improvement was necessary.
“The big problem with the exam was you didn't know if you passed or failed by one mark or 20,” one adviser said.
“At university, if you failed an exam or assignment, your lecturer would sit with you and tell you where your understanding was lacking so you could work on it,” another said, noting the adviser exam delivers a ‘pass’ or ‘fail’ grade without additional feedback on areas of weaknesses.
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Comments7
""Recognition of Prior Learning & Experience" - these are the areas the current government need to consider in relation to the provision of financial advice. I've accumulated thousands of PD points over the years that I've been in the industry, plus passing several courses that weren't recognised as exemptions towards my Grad Dip FP. In addition, simply because my FPA Dip FP & CFP status were obtained a while ago, they were considered of less value than if I'd have completed them recently. The CFP status AND the continuous education together should be considered."
Mark Tyminski 09:29 on 08 Sep 22
"Just read the comments on this page! It is abjectly disgraceful that good experienced advisers are being forced out of our once-great industry due to the inanities of this particularly badly constructed 'exam'. The best in our industry, those who have passed the exam, have confirmed the questions are poorly constructed, ambiguous to say the least and can have a number of interpretations as to the 'correct' answer. It is untenable and shameful that the future and businesses of hard working advisers hinge on the construct of academics who have never had a single moment of a client-facing dynamic in their lives - they have no clue as to how life exists at the coalface helping clients. This sham of an exam is unfair, immoral, punitive and should be scrapped in active retrospect."
Peter James 02:41 on 08 Sep 22
"I failed the exam first up, and seriously the exam I sat was very difficult. I walked away thinking I was confident I knew maybe answers to 5 of the questions which were very ambiguous. 2nd attempt I passed and the questions were clear and very different to the first test. I had the feeling I passed and had an hour to spare, then questioned if I missed a page or two of questions. How could they both be so different? I'm not dumb and neither would rate myself as a Rhode Scholar. I can only imagine how other advisers felt if they failed the exam and it was similar to my first attempt. I am also familiar with study, so know the process and have been in the game for over 14 years at the time. I was ready to walk away. "
Mandy Mellor 18:24 on 07 Sep 22
"I found the exam extremely confusing and difficult, just ask the question properly and straight forward, no double meaning, no twisting questions, " which is most correct " to who? if they are all correct why should the person marking have the final say? A question should have one meaning and not needed to be explained, I am not dumb, I know what is right and wrong, have been in the industry for over 30 years. A real shame that some of the experienced adviser we will loose is no fault of there own, if it is such a fair exam, why are so many failing? , why are the mater classes about how we should interpret the question? It is obvious the content of the exam has changed over time, "
Rodney Cox 17:05 on 07 Sep 22
"The only reason 61% said no extension or assistance is most of them are too absorbed in their own self interest and fail to see how some people with learning difficulties and and impairments along with working in areas that this exam came no where near providing direction in its ambiguous questions could struggle with. A bit of jealousy maybe ? Why should they get out of it when i had to do it !!??. If this exam is to stay for the future{ as per Stephen Jones statement} than it needs a bit more than "tinkering" It needs a full overhaul including and most importantly coming back to he advisers who failed with factual information on how they went and were they need to pick it up and to take into account looking at what advisers{ particularly risk } actually do. "God" help the stock brokers who must think the exam was written on Mars. Time will tell I guess. So many great advisers and experience lost due to unnecessary meddling by people who have no idea how this works. And yes I passed before you all start "
ken 16:37 on 07 Sep 22
"I have sat for the exam 3 times and did not pass. I got my degree in Computer science and information systems from Monash university in 1991. I started working as an insurance agent with AMP in 94. in 1998 left insurance business and worked in IT industry. 2004 got my DFP and 2005 became an AR specializing in Risk. for the past 17 years have helped many people with their insurance needs and had a lot of claims. I don't charge any upfront or ongoing fees, just the commission from product providers. Due to neurological issues, I haven't been able to pass the exam. I find it unfair that because I can't pass the exam, I can't advice clients about their insurance needs. We already have a massive underinsurance problem in Australia. I provide clients with a tailored plan to protect their family and maintain their lifestyle with no impact on their cashflow. I have processed many claims and every single time, clients were extremally happy with the services I provided for them. with the last claim, my client's wife called me and told me, without this insurance, we would have lost our home. I love what I do, unfortunately the government decided that I am not good enough to do this."
Kam Rowshan 16:14 on 07 Sep 22
"Tinkering by the governments and their bureaucrats are to blame for the dire state of affairs. Further tinkering is not recommended; just leave the rules as they currently are. "
enough 16:12 on 07 Sep 22