How do you prepare for the “one size fits all” FASEA Exam?

Stockbrokers and Financial Advisers Association (SAFAA) – Newsletter DECEMBER EdicationDOWNLOAD full article here

The most effective way to prepare for the FASEA exam is to understand the proposed question format of the exam, the concepts and ideas that will be examined, be mindful of where other participants have struggled, and then use this information to reverse engineer a Personal Exam Strategy.

This article does not debate the merits of the exam.  The “one size fits all” exam must be passed.  The real question is “What can I do to maximise my chances of passing?” 

Exam Tip #1 – Know what to expect

The exam is constructed on the basis that the legislation, regulations and Code of Ethics are the same, irrespective of the scope or specialty of the advice an individual practitioner offers.

FASEA has made available exam preparation resources and guides, which can be found at https://www.fasea.gov.au/examination/.  Individuals preparing for the exam often ask, “There is so much reading material and other resources. Where do I begin?”

Filtering out unnecessary information is the first step.  Exam preparation programs can be an effective tool to focus on the important concepts and ideas covered in the exam.  Knowing what you will be walking in to on examination day is also important.  FASEA has released a useful video showing the exam format and how open book resources can be accessed on the day (see https://vimeo.com/395824289).

You may expect around 78 questions in the exam.  This is made up of at least 64 multiple choice and/or true-false questions, and some additional short answer questions which may have two parts.  There may be between six to ten “stand alone” questions which do not relate to a client scenario.

Why is this important?  Knowing what the platform looks like, how the questions will be structured, and how you can access the open book resources reduces mental fatigue. This enables you to focus your mental energy on the questions.

If you are completing the exam by remote proctoring, FASEA has issued a Guide[1] on how to prepare and you can also see tips in myIntegrity’s video.[2]Importantly, you need to read the Guide before you sit the exam. Those who have had challenges with proctoring waited until the exam itself to read the Guide.

Exam Tip #2 – Preparation is crucial

The three core knowledge areas covered in the exam are:

  • Financial Advice Regulatory and Legal requirements (including Corporations Act chapter 7, AML, Privacy and Tax Agents Services Act (TASA) 2009
  • Financial Advice Construction – suitability of advice aligned to different consumer groups, incorporating consumer behaviour and decision making
  • Applied ethical and professional reasoning and communication – incorporating FASEA Code of Ethics

Arguably, many Advisers may be well-versed in some areas, but not all.  You must be prepared to broaden your knowledge in preparation for the exam.  Past exam sittings indicate the knowledge area focus may vary between sittings.  This creates a challenge for participants and means you must have a sufficient range of knowledge to be best prepared.

In analysing past FASEA exams, the concepts and ideas that are consistently examined are:

Corporations Act, especially:

  • Section 766B – Understanding Personal advice, retail clients & wholesale clients
  • Section 961 B, G, H, & J (Adviser Conduct & Disclosure)
  • Section 962 (FDS & Opt-in)
  • Section 963 / 964 (Conflicted Remuneration & Asset Based Fees)
  • Section 912G (Record keeping obligations)
  • ASIC Remedies for breaches of Corps Act
  • FASEA Code of Ethics, with a focus on the intent and application of the Standards and Values.
  • Understanding of Behavioural Finance and Ethical Decision-making theories.
  • Understanding of TASA obligations & Code of Conduct.
  • Understanding Anti-money Laundering obligations and the reporting mechanisms.
  • Application of the Privacy Act and Australian Privacy Principles (APP) to personal advice.

Exam Tip #3 – Be mindful of the knowledge areas others have struggled with

Forewarned is forearmed.

FASEA has highlighted the knowledge areas that participants, who have failed the exam, have struggled with.   This can help you self-evaluate and determine those areas you may need assistance with when preparing.  The areas participants have underperformed in are:

Knowledge area – Financial Advice Regulatory and Legal Requirements:

  • Advice documentation – including Financial Services Guide (FSG), Statement/Record of Advice (SOA/ROA), Product Disclosure Statement (PDS) and Fee Disclosure Statement (FDS) – the exam tests an understanding of when to issue these to clients and what is required to be included (for example, fees and disclosures)
  • Advice Types – understanding the difference between personal advice, general advice and factual information, and how they apply to different client scenarios
  • Privacy Act – understanding the difference between personal and sensitive information and whether consent has been appropriately obtained before using information
  • Anti-money Laundering (AML) Act – identifying potentially suspicious transactions and required reporting
  • Assessing whether advice recommendations meet the client’s best interests, and the impact conflicts of interest may have on advice recommendations

Knowledge area – Financial Advice Construction:

  • Identification of client biases and how they may influence clients’ financial decisions and/or investment choices

Applied ethical and professional reasoning and communication

  • Understanding the application of the Code of Ethics (Standards and Values) and the Corporations Act to advice scenarios

Personal Exam Strategy – tips and insights

The FASEA Exam is a point-in-time assessment.  This means you need to perform on the day.

Insights from successful exam participants support the fact it is important to have a Personal Exam Strategy going in to the exam.  The top tips in developing an effective Personal Exam Strategy include:

  • Give yourself time to prepare – this varies between individuals; however, our experience indicates anywhere from 8-12 weeks is ideal.
  • Have a structured reading plan to familiarise yourself with the three core knowledge areas.
  • Watch the FASEA Exam video to familiarise yourself with the exam platform, the style of questions, and the open book resources you may have access to.
  • Practice the “Control + f” search function within documents.
  • Take practice exams – FASEA offers one, and there are other online practice exam providers such as myIntegrity in Practice. It’s one of the most effective ways to be “exam ready”.
  • Plan your “exam day attack”.
  • Be mindful you have 15 minutes reading time and 195 minutes of exam time.
  • Are you going to answer each question off the top of your head and then come back to cross-check those you are unsure of using the open book resources?
  • Will you answer the “stand alone” questions first in the hope of nailing these and then focus on the scenario-based questions?
  • Read the questions and exam scenarios carefully to understand the intent of the question. In the case of short answer questions, provide responses that directly answer the question.   Use bullet points if the question asks for “two recommendations” or “two advantaged/disadvantages”.

The exam is a moment-in-time assessment.  The implications are significant; however, it is important you have a plan and remain calm.  Seek to understand the intent of each question and use common sense.  Good luck.

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[1] The Financial Adviser Exam, Remote Proctoring Information and Step-by-Step Guide (fasea.gov.au/prepare)

[2] https://myintegrity.com.au/fasea-exam-remote-proctoring-explained/

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