Some sectors of the advisory business in Australia suspect that the new FASEA exam that will see risk advisers test their knowledge on more than 500 pages of the Corporation Act is designed for them to fail.
In an article for specialised outlet ifa magazine, Synchron director Don Trapnell asks: Are the education requirements currently under consideration being drafted to ensure that life insurance advisers fail?
“It’s difficult to think otherwise when specialist risk advisers will likely be required to sit the same exam as financial planners, despite the two being quite different disciplines,” he said.
“It’s difficult to think otherwise when the proposed exam is four hours long, when it’s closed book, when, if you fail it three times, you’re out. But most of all, it’s difficult to think otherwise when 30% of the exam will be on Chapter 7 of the Corporations Act. Chapter 7 outlines financial services and markets, is 500 or more pages long and includes many sections which are not relevant to the day-to-day work undertaken by risk advisers.”
Trapnell (pictured) argues that no amount of “irrelevant further education” changes the way life insurance advice should be delivered to Australians – “and that is, giving people advice that considers their specific risk insurance needs and protecting them and their families against life’s uncertainties”.
He pointed to data from the May 2018 APRA and ASIC joint release on new life claims, which found that 98 per cent of all death claims on individual advised policies were paid out, whereas only 88 per cent of individual non-advised policies were paid out.
“If not for these advisers, even people who are the beneficiaries of life insurance might not be paid the claims they are entitled to because they don’t know how to make a claim, or, in their hour of need, they don’t have the resilience to persist with a rightful claim if it’s contested by a life insurer. If not for risk advisers, there would be an even greater social security debt, an even greater burden on other Australians,” Trapnell added.
Almost 20% of financial advisers in Australia are threatening to quit the industry if the regulator goes ahead with new rules that will force them to undertake additional postgraduate study, as reported by International Investment.