No "bad moon rising": The FASEA Exam

I see a bad moon a-rising
I see trouble on the way
I see earthquakes and lightnin’
I see bad times today
— John C. Fogerty, Creedence Clearwater Revival

For a profession based on reducing anxiety and providing certainty and reassurance, many financial planners are reacting to the FASEA exam with unpredictably melodrama. A three-hour exam may create apprehension for some unused to rigorous academic examination, but, when compared to the need to complete a FASEA approved degree and the inevitable loss of grandfathered remuneration, it should barely register as a concern.

A key element of the push to ‘professionalise’ advice is the requirement that all current advisers pass FASEA”s exam before 1 January 2021. New advisers can complete the exam from now.

I appreciate that some advisers have moral and other objections to the need to sit the exam, but, performance anxiety aside, the exam does little more than test advisers’ practical knowledge of the legal and regulatory environment in which they operate and with which they are required to comply.

It would surely defy reason to suggest that competent, capable advisers - like those currently authorised by regulated entities - are incapable of understanding and practically applying Chapter 7 of the Corporations Act, the Anti-Money Laundering and Counter-Terrorism Financing Act, the Privacy Act and National Privacy Principles and the Tax Agent Services Act.

What they might not appreciate is that, if they’ve been subject to an effective monitoring and supervision regime during the course of their authorisation, they’ve already absorbed a practical understanding of a broader suite of laws then they will be tested on. While they may have absorbed their knowledge of the financial services laws by osmosis rather than deliberation, they should neither undervalue nor trivialise their knowledge.




Appreciate that if you’re competent to provide financial product advice to retail clients, you’ve got this. If you’d like more information about the scope of the examination, and a suggested reading list, FASEA’s exam guidance is a good place to start.

Unconscious competence

It’s been observed that the best way to undermine the performance of a superior golfer, is to congratulate them on a shot and ask them to explain how they did it.

Unconsciously competent people have acquired enough skill and experience in a task that they can do it without conscious thought. If the commentators are correct, forcing them to contemplate their process causes them to revert to an ‘explicit learning’ mode. This conscious learning mode actually undermines their confidence and their performance.

Whether it’s ‘choking’ or ‘yips’ is a matter for scientists but the takeout for competent and capable advisers may be to be confident in their competency and capability. For those that aren’t, direct your efforts to become unconsciously competent by adopting a growth mindset, committing to deliberate practice and testing your knowledge and understanding.

You should ensure that you’ve reviewed the course content before you sit the exam but you should also appreciate that, as a professional adviser, supported by a competent licensee and a highly skilled compliance team, you should already have a sound understanding of the financial services laws. Likewise, your experience dealing with retail clients and regular audits has equipped you with the practical knowledge of how to provide suitable advice, aligned to consumer interests and their biases and apprehension.

Underlying principles.png

The "financial services laws", sometimes referred to as the "applicable laws" or the "relevant laws" are a broad range of interrelated laws including the Corporations Act (including, for example The Professional Standards Act ), the Australian Securities and Investments Commission Act, the Anti-Money Laundering and Counter-Terrorism Financing Act, the National Consumer Credit Protection Act, the Privacy Act, the Competition and Consumer Act, the Income Tax Assessment Act, the Cash Transactions Reports Act, the Superannuation (Industry) Supervision Act, and all other existing and new laws, regulations and rules including Australian Stock Exchange Rules) which may impact Licensees, their representatives or their authorised activities. This includes Corporations Regulations, the corresponding State legislation, relevant administrative ruling, tribunal determinations and circulars, guides and orders published by a relevant body including The Australian Competition and Consumer Commission (ACCC), The Australian Securities & Investments Commission (ASIC), Australian Prudential Regulation Authority (APRA), The Australian Taxation Office, Australian Transaction Reports and Analysis Centre, Credit and Investments Ombudsman, Financial Ombudsman Service, Office of the Australian Information Commissioner and Associations including the Tax Practitioners Board, ASFA, The Financial Services Council, CPA, AFA, FPA, SAFAA and SMSF Professionals Association of Australia

Knowledge, wisdom and understanding.

If more information was the answer, then we’d all be billionaires with perfect abs.
— Derek Sivers

In classical literature, the three intellectual virtues - knowledge, wisdom and understanding - are distinct and seperate values. It’s an important distinction to remember in the context of the FASEA exam.

Knowledge of the law and principles will not be enough; you have to know how to apply them and understand the consequences and implications of doing so. It’s about the practical application of key ideas and concepts.

In this respect, the exam probably plays to your strengths.

Even the component of the exam that concerns applied ethical and professional reasoning simply tests “at a high level” your ability to apply ethical frameworks (and FASEA’s Code of Ethics) to common advice scenarios.

For example:

Question 9 - FASEA Practice Exam

Question 9 - FASEA Practice Exam

Although FASEA emphasise that “.. success in answering the practice questions does not guarantee or imply success in the actual exam “, they suggest the likely structure and focus of the examination.

To prepare effectively, try to answer the FASEA practice questions.

If you’re still apprehensive about the exam:

  • Read your Licensee’s Compliance Manual and policies;

  • Invite your Compliance Manager to lunch (and interrogate them mercilessly);

  • organise a regular meeting with advisers to discuss the application of the laws, regulations and codes to consumer dilemmas;

  • enrol in workshops that address the exam or the underlying topics (first make sure the presenters are credible experts);

  • Appreciate that you can sit the exam as many times as needed (but there must be three months between sittings); and

  • Understand that your results are never made public.