FAAA proposes short, online wholesale investor exam
People wanting to be treated as wholesale investors should be the subject of at least a relatively short online exam aimed at validating their status, according to the Financial Advice Association of Australia (FAAA).
But the exam should not be as extensive or costly as the Financial Adviser exam which costs $1,500, FAAA policy director, Phil Anderson said.
Appearing before the Parliamentary Joint Committee on Corporations and Financial Services, Anderson said the intent of putting a wholesale investor test in place was to impose a higher hurdle.
“That means that the individual will need to be forced to reflect upon whether they are appropriate to be treated as a wholesale client,” he said.
“And if they are absolutely committed and they understand what they are doing and they can make that informed decision that they should be treated as wholesale then that is a good outcome,” Anderson said.
He said that the FAAA did not want to stand in the way of clients being treated as wholesale if they are genuinely appropriate to be treated that way.
Anderson said that in terms of the shape of the test it would need to be something that is online, is easy to do and not a long exam.
“Financial advisers have to do a three hour exam and it costs $1500, that is certainly not what we are proposing,” he said. “We are proposing something that is relatively short but would be sufficient to attest to whether someone has a good understanding or little understanding.”
“Our incentive here is to protect those people who do not have the financial sophistication who are being placed into products through the wholesale regime that they are simply not appropriate for,” Anderson said.
It won’t happen because 95%+ would fail any reasonable test. Same goes for SMSF trustees.
Is there systemic use of “Wholesale” client status inappropriately e.g. significant complaints that would have taken the AFCA route but are now forced to take legal one?
If not is there a need to use a lot of air and money on this when there are probably more important issues to continue to address e.g. financial literacy of our younger generations which essentially alleviates or reduces the impact of many of the concerns/issues we face today?
Well you better not let the FASEA examiners get anywhere near this then!!!! The level of ambiguous questions and irrelevant topics in the FASEA so-called ‘entrance’ exam was ridiculous and highly stressful to have to wade through. I’m still furious about the unnecessary stress they put me and my colleagues through!
The current adviser exam must be a nice earner.
300 sitting at $1,500 delivers $450k
Only multiple choice questions now. Can’t be difficult to mark.
And they don’t release the past exam questions so they’re available for reuse.
Outrageous really that they make an handsome profit out of this.
The FASEA exam was “so called” simplified to multiple choice but we still have half the advisers failing. Why? Because we now have questions with two or three correct answers. Maybe? One short BS exam does not make you competent or ethical !! You either are of you are not ! The fact you passed it first up or after three attempts ( or more) makes no difference and adding one more for the client to do is embarrassing to them and challenges their own ethics and abilities.
Why? It’s to protect lazy advisers who see this as a way around the red tape so let’s qualify them as wholesale
As someone mentioned What a money earner FASEA is !! What will the cost of this be and who pays it?? How about someone going back to the drawing board and fix up the mess we already have before starting another one
This whole argument is missing the point that the only reason advice businesses are looking to make more clients Wholesale is because of the mad Govt Mass BS Over Regulation.
Cut Govt BS Red Tape Regs and Costs by 50% to 70% and Wholesale becomes irrelevant.
AFCA to have its head cut off too.
There should be a similar exam for SMSF members/trustees to make sure they are fully aware of the responsibilities required to be a fund trustee, and have the capabilities to do so. And it should be for ALL members/trustees of a fund, not just the controlling patriarch who pushes his family members into it.
Misses the point. Plus I don’t get it.
Then SMSF Trustees should also need to sit an exam, AND people with a family discretionary Trust………who else ??
CUT THE RED TAPE.
Where is the QAR red tape relief ? WHERE IS IT ??
Wholesale should be opt in for all clients, and be extended to super advice and risk.