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Clock Ticks For Planners Yet To Pass Compulsory Test

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12 October, 2021 by John Collett, Sydney Morning Herald & The Age

Article link: https://www.smh.com.au/money/planning-and-budgeting/clock-ticks-for-planners-yet-to-pass-compulsory-test-20211007-p58y3j.html

How many attempts did your financial planner take to pass a compulsory 3½-hour knowledge test that is part of a raft of regulations designed to weed out dud planners?

Or is your planner yet to pass, despite the first exam session being held in June 2019 – and there having been 13 rounds of examinations since?

Weeding out those planners who struggle to pass the compulsory exam is taking longer than expected

Weeding out those planners who struggle to pass the compulsory exam is taking longer than expectedCREDIT: GETTY

Planners are given three attempts to pass the test; though it is not particularly onerous.

Still, there has been some push-back against the exam from mostly older advisers, who say it is “hard,” making them anxious. They also claim it includes “trick” questions – which it does not.

Angus Woods, founder of Adviser Ratings, says the examination should be “relatively straightforward” for any competent financial adviser.

The test is part of tougher laws and regulations for advisers that were introduced after a string of scandals that left thousands of Australians with their life savings depleted after receiving inappropriate advice.

It tests advisers on their regulatory and legal obligations, ethical and professional standards and communication, as well as how well they construct financial advice.

A pass at “credit standard” is required.

The original deadline to pass the test for existing advisers was the end of 2020. However, the federal government extended it to the end of 2021. It has since extended the deadline again – to the end of September next year – for those who twice fail the exam by the end of this year.

The government also must be concerned about consumers being shut out of receiving quality financial advice as planners leave the profession, leaving those who remain able to charge higher fees.

Planners are departing not only because of the examination, but also because of the increasing burden of regulatory compliance.

The latest extension on passing the test was made in June this year, and designed to encourage planners to start attempting the exam well before the end of 2021.

Any existing planner who had not passed the exam and wanted to maximise their chance of remaining in the industry would have needed to sit last month’s examination session. And if they failed that, they would have to sit the session in November – the last for this year. If they fail that exam, they still have until the end of next September to pass.

The results of the September exam sitting have yet to be released.

However, Adviser Ratings’ Woods says that after accounting for those likely to have passed the test in September, based on earlier success rates, he estimates there would still be about 3000 financial advisers yet to pass – though some of those may have already decided to exit the profession.

That is a sizeable chunk of the 19,000 advisers that Rainmaker Information says were operating at the middle of this year. The researcher estimates almost 9000 advisers have left the profession since 2018, a decline of almost one-third.

The government is between a rock and a hard place on this one. It is giving planners every opportunity to pass the test to help stem the reduction in numbers and rising costs.

However, having some planners continuing to dispense advice who took up to three attempts to pass the test hardly promotes confidence in the quality of the advice.

Comments

Dear Angus, I have taken offence to the tone of this article, just because someone can't pass a test that is onerous and don't tell me it is not if you have not sat the exam yourself. Plus the reference to being a dud adviser just because a person is not suited to a uni style exam is something that i'm sure my clients would take offence to as well. I am disappointed to actually read this article that has been added to a groups website that promotes the benefits of advice. How about the Journalist put forward his qualifications at the start of the article so we can then make assumptions about his Quality of work. Sincerely A.O. B

Angry Old bugger 17:55 on 13 Oct 21

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