Draft legislation addressing the delivery and accessibility of the financial adviser exam has been released by Treasury for consultation.
Treasury says that the Government is committed “…to ensuring the exam remains a pillar of the financial adviser professional standards.”
The draft legislation includes amendments that will:
- Remove the short answer questions from the exam and increase the number of multiple-choice questions
- Remove the requirement that only provisional relevant providers and existing advisers can sit the exam
Treasury’s Exposure Draft Explanatory Statement on the draft legislation says it amends the exam principles in the Determination “…to improve efficiency of, and timely access to, the exam.”
The statement says that exams based on multiple choice questions create efficiencies by enabling computer marking to replace manual marking.
“This reduces the cost of administering exams and improves response times for exam candidates to receive their results.”
…the current exam eligibility criteria, which restricts access to the exam based on the person having already met the qualifications standard, is causing unnecessary delays for new entrants…
It notes too that the current exam eligibility criteria, which restricts access to the exam based on the person having already met the qualifications standard, is causing unnecessary delays for new entrants seeking to enter the profession.
“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 also improves timely access to the exam by reducing bottlenecks and potential delays associated with conducting eligibility assessments for each exam candidate prior to each exam.”
The statement adds that all relevant providers are still required to meet the qualifications standard (i.e. the first standard) in addition to meeting the exam standard (i.e. the second standard) in order to provide personal advice to retail clients.
Responses to the consultation on the draft legislation close on 10 January 2024.
There were 73 questions to be answered in 195 minutes of actual keyboard operation.
Many of the questions did not provide ALL scenario information upfront, instead drip feeding it as one answered the first parts of the question. That’s totally contrary to how advisers are expected to operate by the Code – we are required to obtain full discovery and THEN take a moment to contemplate clients stated needs and objectives.
The underlying principle of the FASEA code is one of “adviser reflection”. In other words the code envisages advisers taking the appropriate amount of time to consider a client situation before making recommendations. An allocation of under three minutes to answer each of 73 questions does not encourage “adviser reflection'”
And don’t mention the fact that there are barely 3 questions out of 73 that have a risk advice element. Examinee participants who are risk only have to learn the skill of transplanting facts into a more familiar scenario before considering an answer. That’s time pressure.
Treasury has belled the cat with its comments on “efficiency of marking”. It was always about costs, because FASEA was funded by the banks to the tune of $11 million for just three years. And the elephant in the room was always that the exam was designed to eradicate those advisers who hadn’t been in a university exam for a couple of decades- pure ageism.
As to whether multiple-choice questions will make a difference, who knows. I argue that the questions firstly should recognise that risk advice is different to investment advice, even if it needs a separate exam paper for risk advisers. Preferably we should have about five questions based on a very comprehensive list of known facts and ask the participant to write say 500 words on how they would handle the case. Of course if your typing is not good you are automatically at a disadvantage, or is that yet one more disadvantage for some.
With the consultation on changes to the Financial Advisers exam article, I responded to Old Risky below, though the same message that always blocks it, being, “The email address you specified is already in use,” appeared.
Old Risky, you have hit the nail on the head.
Over the years, so many experienced Advisers were calling out for and as par for the course, were ignored, that risk advice should be separate to Investment advice, yet the Financial Adviser exam, with it’s NON focus on risk advice questions, highlighted once again, the deficiencies and total lack of understanding from all parties who have had input into Education standards.
The Advised Life Insurance sector is a different Industry to the Investment / Retirement Planning Industry, yet if we put the same ideological and totally illogical Regulatory requirements to the transport industry, how do we think that would end, after all, a vehicular vessel for the transportation of passengers must surely all be treated with the same regulations and processes, as they all do the one thing, right?
Well, that theory turns to chaos within seconds of trying to implement, as even though a bicycle, motor bike, car, truck, bus, boat, helicopter, aero plane are all modes of transportation, if we applied the same rules to all of them, for some strange reason, it would turn to mayhem instantly.
This mayhem is the exact reason why the specialist Life Insurance Adviser has become hard to find, the explanation being, the vast majority exited the Industry and virtually NIL new risk advisers have entered, as their only path is via the maze of doom University Education portal, the end result being, Life and Disability new business plummeting and premiums skyrocketing.
When the Zulu’s were charging the British lines and the troops were crying out for more ammunition, the focus was more on the proper requisition order sheets being filled in and cross checked, with the end result being the lines were broken and all the troops dead.
When the main focus is on ideology and simple processes for the Educators, while ignoring the real world implications of those bad policy decisions, then all that will happen is a continuation of the current decline.
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