Exam changes poised to ‘skyrocket’ pass rates

Last month, the corporate regulator confirmed that it would be implementing the government’s amendments to the financial adviser exam and that the changes would be reflected in the next exam held on 26 March 2024.

Namely, on 14 December, the government released draft legislation under its commitment to ensure the financial adviser exam remains a pillar of the financial adviser professional standards.

The legislation includes amendments that will remove the short answer questions from the exam and increase the number of multiple-choice questions and remove the requirement that only provisional relevant providers and existing advisers can sit the exam.

According to Joel Ronchi, chief executive officer of Fourth Line, he expects that these changes will make it much easier for advisers to pass.

“From my four-plus years of experience in helping advisers prepare for and pass the exam, I can tell you unequivocally that the exam pass rate should skyrocket with only multiple choice and/or true/false questions to deal with,” Ronchi wrote on his LinkedIn.

The exam has been a huge burden for advisers over the past few years, with numerous unsuccessful candidates arguing that they are in the dark on how they can improve their knowledge. Criticism has also been directed at the exam for its perceived disconnection from the practical aspects of being an adviser.

Having assisted advisers, stockbrokers, and licensed accountants in their exam preparations through structured programs and personalised tutoring, Ronchi shared with ifa last month that two significant concerns raised by participants over the years involve the ambiguity and perceived unfairness of short answer questions. Additionally, individuals who do not pass often express frustration at the absence of personalised feedback.

“The proposed changes help alleviate the first gripe, and possibly the second if ASIC decides to go there,” Ronchi said at the time.

“The proposed changes may also help financial advice practices and AFSLs as the exam will no longer have a potentially adverse impact on the professional year as the person can complete the exam at any time (based on scheduling) but must do so before being eligible to enter the third quarter of the PY.”

Within the industry there has also been a collective push for a reduced exam fee, with the Financial Advice Association Australia (FAAA) noting last month that the exam is expected to be more cost-effective to administer, advocating for a corresponding reduction in the exam’s cost.

“The cost is now $1,500 per attempt, almost three times higher than it was when the exam was first introduced in 2019,” FAAA chief executive Sarah Abood said at the time.

Moreover, the Stockbrokers and Investment Advisers Association recently lobbied for additional recommendations to improve the exam.

This included allowing candidates to sit the exam at any time rather than being bound by an exam timetable, adding a broader range of scenarios in the test, and encouraging more tailored feedback to be given to unsuccessful candidates.