“If you need me, call me,
No matter where you are
No matter how far,”
— “Ain’t No Mountain High Enough”, Ashford Nickolas / Simpson Valerie
In a recent media release, FASEA congratulated 14,850 financial advisers who had passed their exam, representing close to 70% of active advisers on the Financial Advisers Register (FAR).
Since the first exam sitting in June 2019, the Exam has been offered 12 times. An adviser who sat the first exam in 2019 had up to 8 attempts to pass the exam before the exam deadline.
Recently, relief was granted from the 3-month registration requirement for the November 2021 exam sitting. The relief will allow all candidates who have been unsuccessful at any prior sitting to sit the November exam.
Of the 882 unsuccessful candidates who have re-sat the exam 578 (66%) have passed at a first or subsequent re-sit.
Analysis of the composition of the 1437 who have failed to pass the exam to date, shows a 60/40% split between generalist financial planners and specialist financial advisers.
Those advisers seeking our exam tutoring services, seem to be grappling with three main things to successfully complete the exam:
- Being assessed at a level equivalent to a University Degree Australian Qualifications Framework (AQF) Level 7;
- Suppressing the urge to rely on decades of experience and automatically responding when answering exam questions; and
As we know, a large percentage of advisers are still needing to complete their degree requirement to meet the obligations, and they have until 2026 to do so. For those advisers who have never completed a University Degree, and rather have relied on completing a Diploma (AQF5) or an Advanced Diploma (AQF6), they will not be used to being assessed at an AQF level 7. It’s a case of putting the cart in front of the horse.
In 2019 FASEA survey of higher education providers, new and existing advisers were enrolled in 11,000 individual units of study. Higher education provider returns for 2020, just 12 months later, document a close to 300% increase with new and existing advisers enrolled in 33,000 individual units of study. Based on that survey, between 2019 and 2020 the number of undergraduate students (not existing advisers) studying FASEA approved degrees has increased over 300% between with approximately 2,800 enrolled (using TEQSA standards).
FASEA Opening Statement
Examining you at a Bachelor Degree AQF 7 Level
For those advisers who have only ever completed diploma level qualifications, which in accordance with the AQF framework are based on a Level 5. In contrast the exam is assessing at an AQF Level 7.
This is a material point, as you are being examined at two levels above what you would have traditionally been assessed when completing your Diploma of Financial Planning for example.
Per the AQF standards, Level 7 Australian Qualifications Framework, Australian Government (aqf.edu.au) application of knowledge and skills at this level means you need to apply knowledge and skills to demonstrate autonomy and limited judgement in structured and stable contexts and within narrow parameters.
The volume of learning to complete a Degree qualification is typically 3-4 years.
In contrast application of knowledge and skills at an AQF Level 5, means you will apply knowledge and skills to demonstrate autonomy, judgement and defined responsibility in known or changing contexts and within broad but established parameters.
The volume of learning to complete a Diploma is typically 1-2 years.
If you are not used to engaging in degree level learning and assessing, completing an exam at this level may feel a little foreign to you.
When we tutor advisers, we:
- desensitise and get them familiar with AQF Level 7 assessments;
- coach them to read the questions and unpack what the question is actually saying;
- help them identify distractors when answering multiple choice questions; and
- apply a scaffold to assist with answering the question.
Suppressing automatic responses
Adults learn best when they have control over their own learning.
It’s no surprise then, when we see advisers reluctant, hesitant and frustrated when engaging in the FASEA requirements.
The concept of the existence of practical as opposed to academic intelligence is relatively new in the psychological literature. Academic intelligence relates to performance on abstract, theoretical tasks, while practical intelligence underlies skill in everyday tasks.
The FASEA exam is largely based on the application of law in the provision of advice, which asks for the examinee to attain a body of knowledge drawn from the abstract side of the equation. Which for some advisers is challenging.
When we look at an exam question, the tension an adviser has is to suppress the urge to answer the question using instinct, and a system 1 response, which is typically quick, automatic and based on instinct. A response that is fuelled by practical experience and knowledge gained dealing with clients over potentially many decades.
Automatic responses are essential, to survive we need to be able to react automatically, jumping out of the way of oncoming traffic. In comparison to slow and deliberate thinking when working through a problem.
In accordance with the Daniel Kahneman’s work on system 1 and 2 thinking.
System 1 is “fast,” comprising the various heuristics and biases that immediately perceive events; System 2 is “slow,” allowing us to observe and direct our attention, and gather evidence for or against one idea or another.
The highly diverse operations of System 2 have one feature in common: they require attention and are disrupted when attention is drawn away.
In System 2 thinking you must pay attention, and you will perform less well, or not at all, if you are not ready or if your attention is directed inappropriately. System 2 has some ability to change the way System 1 works, by programming the normally automatic functions of attention and memory.
For advisers operating from practical experience and instinct, they need to learn to pause and reflect and be more deliberate in their response. They need to develop a response that asks them to apply a lens of the law, regulations and guidance.
Taking a practical approach. Let’s consider an exam question (drawn from the FASEA practice question set) dealing with further advice and the use of Records of Advice.
Lisa calls her adviser in relation to making a switch from one Australian Shares managed fund in her investment portfolio to another Australian Shares managed fund, due to a better research rating. The fees and the asset allocation strategy of both funds are similar. Lisa’s personal circumstances have not changed since the last Statement of Advice (SOA) provided to her by the adviser five months ago.
Select True or False for each of the following statements. As per requirements of the Corporations Act (2001) the adviser should: True False prepare a new SOA for Lisa since the changes were recommended by him and Lisa is acting on his advice. prepare a Record of Advice (ROA) incorporating reference to the original SOA – the ROA can be a tape recording of the phone conversation acknowledging and agreeing to the investment switch.
As an adviser you might engage auto pilot and immediately jump to RoA.
However, if you had to explain how you came to this conclusion through conscious thought and applying relevant legislation, you would have to:
- decide in what kind of scenario the law allows the use of an RoA;
- conclude that it is not a legal requirement to give an RoA to the client;
- be satisfied you have issued a SoA to the client;
- understand the further advice is consistent with the original basis of advice;
- be satisfied that the further advice is not materially different;
- be satisfied that client circumstances haven’t changed from previous SoA; and
- understand the form an RoA can take and the neutrality of the Corporations Act about how advice is delivered and that the law is generally the same regardless whether advice is provided face-to-face, by telephone, email, internet or video conferencing, or using any combination.
By engaging a system 2 approach to thinking and analysing the question, it is important to consider all the elements when providing legally compliant advice. You may miss an element when you engage your auto pilot, particularly when responding to a multi-faceted exam question.
When working with our clients, we help you decipher the question and apply the relevant laws. Which is no mean feat when you consider the financial advice legal landscape traverses approximately 1500 laws across a multitude of acts.
GETTING the monkey off your back
Fear of failure, or atychiphobia, can render adult learners immobilised and unable to progress.
Defining failure is unique and largely due to unique belief systems and values. Do you have a monkey on your back that says, ‘you don’t have a degree, you won’t be able to do this exam’, ‘all of my peers have passed, why can’t I pass’, ‘I have never been good at exams’ etc.
Additionally, your fears could be built on negative influences during your learning journey through school and childhood. An awful school experience, traumatic event or crappy parents, can dramatically impact on an adult learners’ ability to engage in further learning.
Sometimes adult learners carry these fears into their further studies in later life and they give these fears free reign. In Bruce D. Perry’s “Fear and learning: Trauma related factors in the adult education process” he suggests nearly one-third of adult learners bring their history of neglect, abuse, violence or developmental chaos into the classroom.
When we work with clients, we work on a technique dealing with left and right brain responses. We help you understand what happens when you feel fear and how this impacts on your performance.
Fear reaction starts in the brain and the way this impacts your reaction, with its most primal of responses a fight or flight response. The fear response starts in a region of the brain called the amygdala which processes emotions. The emotional part of your brain can deactivate the cognitive (or rational and thinking) part of your brain. The hippocampus and the frontal cortex process contextual information.
If we are all honest with ourselves, who hasn’t been so nervous that their mind has gone blank. It is safe to say, this type of response is less than ideal when you are in an exam environment. We need to learn techniques to maximise the frontal cortex to process contextual information.
If you find yourself in a situation where you are in the 30% of advisers and need to complete the FASEA exam, or if you are one of the many on the academic pathway completing your degree and you need tutoring help, give us a call.