We were recently asked by one of our clients about FASEA’s proposed Financial Adviser exam and what it meant for them, so we’ve broken down the who, what, when, where, why and how of the exam, so you can learn everything you need to know.

Note that this is based off the proposed FASEA consultation paper, and the final exam requirements may differ slightly.

We’ll be sure to update you via the Caddie Blog once they’re announced.

What is the exam?

FASEA describes the purpose of the exam as “ensuring consistent, minimum professional standards of education and competency apply to financial advisers nationally”.

This exam is not about proving specialist skills in different products, it is to ensure that the 25,000 plus financial advisers across Australia all meet a minimum level of competency!

So, if the exam isn’t about proving specialist or specific product competency, then what will it cover?

The proposed exam will have the following five parts to it, with each section making up a set portion of questions.

1. Corporations Act (emphasis on Chapter 7 - Financial services & 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%

In what style will the exam take?

The exam duration will be somewhere between 3 to 4 hours and will consist of a mixture of multiple choice and written responses.

FASEA is proposing an exam with 75 questions, split between a maximum of 70 multiple choice and a minimum of 5 written response questions.

Note the maximum and minimum number of questions, these ratios will change from exam to exam! FASEA details that the exam will generated from a library of multiple choice and written responses questions.

These questions will be randomly selected for the exams and will rotate in and out, be retired and regularly added too!

What score will I need to pass?

The pass market proposed is 65% in total, with a minimum 50% pass for sections 1, 3, 4 and 5.

However, for section 2, FASEA proposes that Advisers will need to get a 75% pass mark on the Code of Ethics portion.

There is an interesting side note on the marking of the exam.

An Advisers “raw score will be arithmetically converted to a scale that ranges from 0 to 100”.

The reason for this is to take into consideration the different difficulty levels of the exam questions, as they randomly rotated in and out.

So, don’t worry, if it turns out your exam was really hard, it might be you got all the tough questions and you might still have passed.

If it turns out you don't pass the exam on the first attempt, it's not all doom and gloom. FASEA is proposing that Advisers will get two resits, with a defined period between each resit. 

How can I prepare for the exam?

FASEA at this stage does not intent to provide “examination preparation courses” but from out understanding they expect third parties will be creating these to assist Advisers pass the exam. But, FASEA may provide a recommend reading list to assist Advisers to study the right sections!

How will I sit the exam?

FASEA is proposing that for existing Financial Advisers, from the middle of 2019 to December 2020, the exam will be scheduled once a month in every capital city.

For those in regional centres or remote areas, the exams will be held less frequently, but you might get to sit the exam via a digital invigilation options!

For those curious as to what digital invigilation means, check out this BBC news article which gives an overview.

While for new Advisers, the exam will be held four times per year.

When do I have to take the exam?

Existing Financial Advisers have until 1^st January 2021 to pass the exam, while new Financial Advisers must pass it before they can be registered as a provisional relevant Provider.

For further information on the exam, you can read the consultation paper here.

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