It will have escaped no-one’s attention in the financial planning industry that the Financial Adviser Standards and Ethics Authority (FASEA) exam process is reaching its crescendo – that unless advisers sit the exam in the next six months they will quite simply have missed out.
And, by missing out, those advisers will be obliged to cease practicing and, very likely, feel the need to exit the industry. Quite simply, existing advisers are required to pass the exam before 1 January, next year, and there are now extremely limited opportunities to do so.
According to the FASEA exam timetable there are now just three sittings left, after those currently being held in May – July, September and November. After that, legislation dictates the door is closed.
All of the above explains why the May sittings have been amongst the most heavily booked and why the heavy bookings seem likely to continue through July, September and November as financial advisers rush to meet what represents one of the key requirements under the FASEA regime.
It is in these circumstances, and the reality that exam failures will accelerate the already disturbing exit of advisers from the financial planning industry that the Minister for Superannuation, Financial Services and the Digital Economy, Senator Jane Hume, would be well-advised to urge those running the exam to inject some flexibility and exercise a little more discretion.
The injection of that flexibility and discretion would seem necessary in circumstances where the current rules preclude someone failing the July sittings of the exam resitting within three months, meaning that they probably only have one shot left before the processes closes for good. It also means that those sitting in September may be squeezed out entirely.
Financial advisers and licensees who have closely monitored the data around adviser exits have frequently told Money Management that exam results from the September sittings will represent the start of what is likely to be the most significant outflow of advisers which will then be magnified in the wake of the November exam results.
On past experience, around 70% of advisers will pass those exams meaning around 30% will fail but the impact on exits between September and December may be more significant given the number of advisers who have actually booked to sit or resit the exam.
That is why some pragmatic flexibility needs to be exhibited by both the Government and those remaining in FASEA to oversee the delivery of the exam.
While there were sound enough administrative reasons behind the three-month rule, it is now obvious that it is going to act as a significant inhibitor to slowing the already worrying rate of exit by experienced financial advisers. In those circumstances, consideration needs to be given to waiving the three-month rule to maximise the opportunities for advisers to succeed.