Preparation key to passing FSB exams

22 November 2011 Alexander Forbes

The outcry from financial advisors over the FAIS Act’s requirement that all advisors pass the Financial Services Board’s (FSB) Regulatory Exams resulted in only 11% of financial advisors having written the exams by June 2011.

The FSB exams were introduced to protect customers and professionalise the financial services industry by ensuring that all financial advisors in the industry understand what the FAIS Act requires of them along with their regulatory roles and responsibilities.

While, the multiple choice format limits the exams’ ability to measure the depth of experience that many practitioners’ have, the exam is critical in “developing a standard that consumers can rely on as well as a benchmark for the industry” says Arthur Hlubi, Head of Compliance, Alexander Forbes Financial Planning Consultants.

So while Hlubi urges the FSB to take heed of the feedback that it is receiving from various quarters with regard to the format of its exam, “the principle of the exam and the areas of knowledge that it aims to test and develop within our industry are sound and, indeed, long overdue if we are to develop the professionalism, and with it the public confidence, that the financial advice industry requires to thrive.”

Recognising the importance of professionalising the financial advice industry, Alexander Forbes adopted a co-operative and proactive approach to the Regulatory Exams, setting aside time and money to assist their financial advisors prepare for and pass the FSB exams. To this end all Alexander Forbes advisors received a study pack together with access to E-learning material and face-to-face lectures ahead of writing the exam. This has enabled Alexander Forbes achieve an exceptionally high pass rate. Also, “over 90% of our advisors have written the Exam, compared to the industry average of 11% announced by the FSB in June 2011” says Hlubi.

Alexander Forbes’ experience, in the training and development of its advisor base has shown that putting the right preparation model in place helps financial advisors pass these exams.

When the FAIS Act was promulgated Alexander Forbes independently took the decision that all their financial advisors should to be Certified Financial Planners (CFP®s). As such, all new hires had to be CFP® qualified or earn it within the first year of their appointment. Existing advisors without a CFP® would be helped to write and pass the CFP® exam within two years.

Since the CFP® exams are in September each year, weekly lessons run by qualified training and development professionals commenced in February each year for all aspirant candidates.

Given Alexander Forbes’s experience with CFP® preparation, when the FSB announced that all financial advisors in South Africa needed to pass a standard preparedness exam “we adapted the learning’s that we’d applied preparing staff for the CFP® process to the new FSB exams” says Hlubi.

So, while developing and implementing a structured and proactively taught process of FSB exam preparation does take time and money, “being able to offer a FSB-approved advisory service to clients lends weight to the competence of our offering. It also ensures that all our advisors deliver a uniformly high standard of advice to all clients” concludes Hlubi.

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