FASEA issued a media release at the start of August stating that 16,700 advisers had sat the exam with 14,850 advisers passing, which FASEA said represented 70 per cent of advisers on the Financial Advisers Register (FAR), leaving 30 per cent of advisers to pass or attempt the exam twice before the end of the year.
However, Wealth Data noted that these figures fail to adequately reflect adviser exits and attrition. Additionally, Director of Wealth Data, Colin Williams noted that FASEA had announced previously that 74 per cent of advisers had passed the exam, but this included 1,300 advisers who are not current on the FAR. Wealth Data pointed out that 70 per cent of ‘active’ advisers equates to around 13,544.
Williams pointed out that the 13,544 exam passes would equate to 65% of advisers at the start of 2021; 57 per cent of advisers as of January 1, 2020 and 48 per cent as of January 1, 2019. As he noted, the pass rate of 70 per cent does not tell the full story.
SAFAA has been warning government and regulators for some time about the exodus of advisers from the industry and the impact this will have on consumer access to affordable advice.
The FASEA release also stated that 89 per cent of exam takers had passed. ‘The high pass rate reflects that the exam is an achievable exam for competent relevant providers regardless of their area of specialisation,’ FASEA said, arguing that its data showed that specialisations could not be argued as a factor for pass rates.
‘Stockbrokers have been particularly vocal that the exam is not fit for purpose,’ FASEA said. ‘FASEA analysis indicated that the pass rate for relevant providers who work for stockbroking Australian financial service licensees (AFSLs) is 84 per cent and that 14 of the 20 stockbroking AFSLs on the FAR have pass rates above 84 per cent.’
Again, research by Wealth Data presents a different picture, noting that the pass rate refers to advisers who have attempted the exam and that there will be stockbrokers who will not sit the exam at all.
And of course, as stockbrokers and investment advisers are aware, failure to pass the exam by the deadline results in the adviser no longer being able to provide personal advice to retail clients. It’s not as if they have another choice if they want to continue in the industry.
The industry was left to ponder the reliability of the FASEA data and recall that the phrase ‘lies, damned lies and statistics’ is used to describe the persuasive power of numbers, particularly the use of statistics to bolster weak arguments.