FASEA Releases Draft Adviser Exam Guide

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A proposed 65% pass mark will be required for all advisers taking the new Financial Adviser Examination.

Guidance for the exam has been released by the Financial Adviser Standards and Ethics Authority, in which it proposes that, in addition to an overall 65% pass mark, those taking the exam will also be required to achieve a minimum 75% pass for FASEA’s Code of Ethics component, and a minimum 50% pass for each of the other four components being examined.

The five examination components, and the weighting proposed to apply to each section, comprise:

  1. Corporations Act (emphasis on Chapter 7 – Financial services and markets) – 30%
  2. The FASEA Code of Ethics – 15%
  3. Financial Advice Construction – suitability of advice aligned to different consumer groups – 20%
  4. Behavioural Finance: Client and consumer behaviour, engagement and decision making – 10%
  5. Applied ethical and professional reasoning and communication – 25%

Existing advisers (as at 31 December 2018) will be required to have passed the exam by 1 January 2021, while new entrants from 1 January 2019 (or those returning to the industry from that date) will be required to pass the exam after they have completed their tertiary degree, and before commencement of their professional year.

The proposed format of the exam itself comprises 75 questions split between a mix of multiple choice and written responses, a substantial part of which will be based around case study references.

…the examination relies more on the application of [factual] knowledge to actual financial advice scenarios

In its guidance paper (click here), FASEA emphasises more than once that, “Although the questions can rely on a factual knowledge base, the examination relies more on the application of that knowledge to actual financial advice scenarios.

FASEA appears to be taking a tough position on advisers who do not pass the exam on their first try. It notes that it expects individuals will have the ability to apply for a resit, but only in what it refers to as “… exceptional circumstances (e.g. Illness).”

The Authority adds that individuals will be able to sit the exam for a maximum of two resits, where there will be a defined period between each resit.

It notes that any reference material (electronic or hard copy) during the exam will not be permitted, that mobile phones and other equipment (including pens and paper) must not be taken into the exam room and that access to the internet will not be permitted in the exam rooms or in the examination waiting areas.

FASEA is soliciting broad industry feedback on almost every aspect of the exam and the processes supporting it, and encourages submissions from advisers and others, which will be open until the end of July.

Submissions must be provided in writing to FASEA’s dedicated consultation email address at: ‘consultation@fasea.gov.au’.



19 COMMENTS

  1. Why should there be sections on ethics and ethical behaviour when everyone has to pass a separate ethics subject and exam. Overkill

  2. Nice Cognitive planning FASEA morons, I have to pass an exam based significantly on 3 bridging course subjects that I also have to study but I have 3 extra years to study, after the exam ?
    WTF
    Will passing this exam save me $15,000 in bridging uni course costs plus 360 hours of wasted work time valued at over $108,000 to study these topics that I have already supposedly passed an exam on ?
    Do these people setting this agenda and process have any reality or cognitive brain.
    FASEA and ODwyer what is going on.

  3. I question the value of an examination where reference materials are not permitted. In practice we have access to all these things. Strategic thinking is not tested by the recitation of facts and figures.

    • It’s what has been the core of the agenda from the beginning limited retail advisers equals more profit for the banks and insurance companies and opens the door further for them to “flog” their on line no advice rubbish
      I wonder how we would go if we all turned to a no advice license No exams no worries no caring for the clients Just flog what we can !!
      No legal issues on who said what
      Don’t laugh it’s exactly the way this whole mess is going
      Hope I can retire before the next royal commission that should start at how the LIF got started in the first place built on lies and inexperienced politicians who “caved” into the banks and insurers

      • Yes LIF came out of agitation by Politician “Wackka ” Williams (perhaps wackka says it all) and some far left wing colleagues, and the revelations by Jeff Morris who seems to have put on considerable weight since his whistle blowing days, now that he helps people, and, of course Mr Trowbridge who has publicly admitted to knowing NOTHING about the Life Insurance Industry before he chaired the AFA/FSC Inquiry. I say shame on the AFA and FSC for running the Trowbridge Inquiry in the first place. Shame on the Politicians who caved in to the Companies who stand to benefit from lower and deferred commissions and unreasonable claw backs that LIF brings. Shame on FASEA for even considering the current Exam proposal.

  4. The comments so far show how advisers feel about this nonsense. One concern I do have is whether it is the one exam for both risk specialists and financial planners? Will risk specialists have to answer question on financial planning? Has anyone raised this with FASEA?
    Before reading this, I spent 45 minutes on the phone with an insurer trying to fix their system failures. Insurers have successfully lobbied for a reduction in our income, a 2 year clawback which is pure evil. Now my staff and I are continually fixing insurance companies failures and they expect us to give them new business! On top of that, I will now have to find time to prepare for this exam. Do they really all think that risk advisers are accepting of all of this? As Damian has said – goodbye to the retail life insurance industry in this country.

  5. Wow, this will certainly get rid of 30 to 50% of advisers.

    I am relatively confident that I would pass the required exam but there are significant concerns for the industry.

    The most disturbing impact of this is that advisers need to pass the first try or else may be unable to provide advice until they do pass the exam (assuming they are allowed to do a resit which could be months later).

    Why doesn’t FASEA apply some common sense to this situation as follows.

    Why do you need certain conditions to exist to resit the exam? Most uni courses allow students that fail a subject/ exam to redo that subject next semester. Why cannot financial advisers have the same ability to pay a fee and resit the exam and pass it then. That could be a month later for example to allow more revision.

    What happens if you have a bad day and fail a section of the exam? Assuming you are allowed to re sit why do you have to resit the entire exam and not just the section that you failed. FASEA have already declared that they are breaking the exam into sections so why are advisers required to resit the entire 3 to 4 hour exam.

    It would make much more sense for advisers to only have to resit the section failed.

    Why are there limits on resits allowed? Currently two with certain conditions to be met. What are the odds of having exam issues due to extenuating circumstances twice anyway? I believe most uni courses can be paid to do again and sat as many times as you like. Why are financial advisers placed under such draconian rules.

    What happens to your business or employment if you fail the initial first exam? Are you unable to provide advice which means effectively that you will need to shut your business down? Do you need to sack your support staff and sell your business? If resits are monthly then you why cannot you be allowed to remain advising for up to six months while you do one or more resits? Is this the best FASEA can come up with?

    While we are at it lets legislate for all doctors, lawyers and accountants to resit the equivalent exam as per new graduates and let’s see how many of them pass and are allowed to remain in practice. I guarantee that a large percentage who have been practising in a particular area for 20 years would struggle to pass a general exam.

  6. examination rooms? what is this, high school? Ethics, you have them or you don’t! I would like to see all these sanctimonious politicians and members of the FSC, bankers, FASEA etc etc pass an ethics exam, then maybe they deserve to sit in their holier than thou towers.

  7. All I can say is thank goodness I have left the industry. Not against knowledge and study but with regular Kaplan required readings, PD days, discretionary readings and trying to run a business, this is a farce brought on by those who have no idea.
    They can just sit around on big fat salaries while advisers who have to generate all the business are treated with contempt.
    If you can retire or sell your business, do it now as it will only get worse.

  8. Great news for a talented young adviser! I failed Matric [Year 12] in 1975. I somehow managed to build a successful ‘risk only’ business over the past 30 years, even though I was a scholastic ‘dud’. So I will be in future discussions with my License Holder to match me to the right ‘younger’ person. They can do all the study [or will have done it already] and provide the ongoing ‘advice’ to my large client base. I will sit back and manage the business and over time allocate percentage ownership ‘rewards’ to that person. In 10 years time they will be the proud owners of a very successfully business without having to have paid one red cent to me!

  9. I wonder how many Pollies would pass the Ethical exam what with the dual citizenship and god knows how many other things…….

  10. The folks that are compiling FASEA nonsense need to understand that Ethics, Codes of Conduct, qualifications of itself will not provide a solution to those in this industry seeking to do wrong. From CEO’s to advisers this is the case. Jail will.
    As to FASEA, for those who have done CFP – Unit 1 is on Ethics – so does this make a mockery of the FPA or for that matter the AFA.
    The courses of study we have all done or were compelled to do to practice as a business was instigated by regulators. Are we now saying, they were incompetant. And what about the politicians that pushed a failed agenda called vertical integration. Were they also incompetant.
    To those regulators and politicains who presided over failed regulation costing investors their life savings by not providing the due oversight…will they keep their jobs and salaries.
    This industry folks are being run by some very stupid people. Be they in regulator world, politicians and the associations.
    The consequence to this industry will be large. Very large. For those that seek to remain in the industry, take note this will not end here.
    Take a look at the tax industry. Incompetance on steroids with no direction whatsoever.
    The car industry – gone
    Debts on houselholds at frightening levels – so try asking these folks to pony up a fee for advice. This is crazy and run by lunatics. They do not care about consmers – let alone advisers – just as long as they can create a job for themselves pushing an ideology that has proved a disaster in the UK, NZ and almost the US.

  11. It was Einstein who said, ‘never memorise something that you can look up’. I guess our political geniuses know better.

  12. Totally over it. done 30 years and will retire 10 years earlier than planned. don’t need it. We are often told the pendulum swings to far and comes back, but ive not ever seen the pendulum swing back since i started. This will continue to get harder until the industry is fried and advisers will be scared to write business. it will continue to get harder as they are not tackling the real issues and solving what was broken. The complexity is further beyond human to deliver perfection and perfection is not easily defined and often misunderstood. technology cannot seem to keep up. Why bother any more?

    pulls boots off and time to enjoy more.

  13. I must say that when I read the comments so far and if I was a politician, I would feel justified with the FASEA decisions. This is the world of professionalism where you have to show academic skills to belong.

    Consider what a doctor, lawyer or accountant needs to show academically to be permitted to practise. They are now asking the same from us.

    Why are we treated differently to accountants where, when educational standards were raised, existing accountants with lower qualifications were grandfathered in?

    Our reputation.

  14. Reference materials will not impact people’s ethics.

    However with 21 years of industry knowledge in my head, reference items are part providing advice…information is checked and confirmed before being provided to clients.

    I’m already studying at FASEA requirement levels and will continue to do so, simply because I want to stay in the industry.

    However it’s extremely frustrating how long its taking to resolve the education debacle. And it’s seriously disappointing that there will be 1000’s of hours worth of experience exiting the industry thanks to this crazy educational witch hunt.

    As someone who employed a 3rd yr uni student (financial planning and economics) I was often teaching him what tutors couldn’t. I don’t hold much hope for the new generation of ‘educated’ advisers fresh from ‘learning institutions’; there’s nothing quite like practical experience to make you learn at a deeper level than books will ever teach you.

  15. We all seem to forget that being an insurance adviser is a super glamerous job and all the smart kids at school always wanted to be an insurance sales man. I couldnt wait to finish school so i could spend 4 years at uni studying to atain the super sexy role of insurance adviser.

    Come on regulators. People got in to this industry because it used to pay welll and is relatively easy. You dont need to be super smart to be an insurance adviser. You just need to be good with people and have the personality which puts the clients’ best interests first. Unfortunately there have been some bad apples who have runied it for all of us and the only way to weed these people out is to turn this profession into a career with participants who have spent some time at university to get the qualifications.

    Unfortunately no one is going to go to uni to do an insurance salesman course. So these educational requirements will be the final nail in the coffin for risk advice other than for the HNW individuals who dont really rely on insurance as much as the majority.

    But im pretty sure that is what the politicians want. So then the insurers can have their sales team selling the in house product under general advice and the client doesnt get access to an adviser to help them out at claim time.

    Without advisers helping out with claims the insurers will put up as many barriers to claims so that the client is forced to go to the big law firms (which are in bed with the insurers) and these law firms will force the client to settle out of court for a fracton of the benefit amount so they can claim their fees and so the insurer gets out of paying the full claim.

    Im pretty sure all these changes over the last few years has been implemented with the intent of removing advisers from the picture as we were the only ones who ever acted in the best interests of the clients, therfore hurting the profitability of insurers and law firms.

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