As a former financial planning university lecturer, MetLife’s Head of Advice Strategy, Dr Jeff Scott, knows about exam pressures and how to help students prepare. Here, he reveals his pro tips for the all-important Financial Adviser Standards and Ethics Authority (FASEA) exam.
UPDATE: [19 March 2020] Due to the COVID-19 outbreak, FASEA has announced that it is cancelling the APRIL 2020 face-to-face exams. Advisers have the opportunity to complete their exam online, irrespective of their distance to an exam centre. Alternatively, advisers can defer their exam until June or later. Many of the tips contained in this article remain relevant, irrespective of the exam delivery mode.
All existing financial advisers are legally required to pass the FASEA exam by 31 December 2021 (the Treasury Laws Amendment (2019 Measures No.3) Bill which amends the corporation Act to allow more time to pass the FASEA exam has passed in the House of Representatives, it has to be passed in the Senate) to be allowed to provide personal financial advice to retail clients about retail financial products.
What is the exam format?
The test requires you to show how you’d apply your knowledge and skill across three areas:
- Financial Advice Regulatory and Legal Obligations
- Applied ethical and professional reasoning and communication
- Financial Advice Construction
The questions are quite involved, and it’s a combination of multiple choice and short answers.
How many questions are there?
About 70, and the exam goes for three and a half hours (including reading time) so you have about three minutes per question. If you’re not sure of a question, make a note of the question number, leave it and come back to it later.
Approximately 65 questions are multiple choice responses, and the remainder (approximately 5 questions) are short answer questions where the responses are entered into a computer (not hand written).
If your typing skills are not great, then allow enough time to enter your responses
What can advisers expect at the exam?
The exam is structured to mimic a traditional university test format. You aren’t allowed to have anything on your desk except:
- A pen provided to you
- Admission ticket with your exam details
- One proof of identification (your Australian drivers’ licence or Australian passport or Australian Proof of Age Card)
You’re given 15 minutes of reading time to review the exam questions, and all questions are completed on a computer.
Nothing else is permitted on your desk. If your phone goes off, you fail. You need to ask permission to go to the bathroom, and you’ll be escorted by a supervisor. It might seem over the top but it’s to make sure standards are maintained. It’s really important you understand this is what the exam environment will be like.
What are some smart ways to prepare for the exam?
Prepare early and don’t try to cram at the last minute. The questions are taken from 25 readings, so I’d recommend you start studying these readings two months before the exam, especially if you’re not a quick reader.
Practise how many case studies you can complete in three and a half hours – which is the length of the exam. If you have questions while you’re studying, ask someone who knows. It's not about regurgitating knowledge. It's about showing you can apply the knowledge.
What is the minimum grade to pass?
You need to achieve a minimum Credit grade to pass (a score of 65%).
What happens if you fail?
You must re-sit the exam, which is run every three months. Currently there's a requirement to pass the exam by 31 December 2021. If you don't pass by then, you can't give advice to your clients until you've re-sat the exam and passed.
Just because you fail the exam, however, doesn’t mean you’re not a good financial adviser. It just means you mightn’t be good in exam situations. The skills you need to pass the exam are different than those you need to be a good financial advisor.
To prepare for your test visit the FASEA website for study resources, including 42 case studies and an exam prep guide with sample questions.
Note: candidates with special needs can request support for appropriate assistance to allow them to sit the exam. See page 8 of the FASEA Examination policy for more information.