Regulatory Exams: Conquering the RE challenge
Recent media reports may have disheartened many financial advisors regarding their chances of success in the regulatory exams that must be passed by the end of the year. However, many people have already successfully conquered this challenge and their fee
The industry has been buzzing with criticism, rumours and negative media reports regarding the regulatory exams. Rumours regarding the difficulty of the exam questions and the allegedly high failure rate of around 75% among those who attempted the exams, have been rife in the industry, leading to a growing resistance against this new requirement.
In particular, the newly established National Association of Independent Financial Advisors (NAIFA) has been vociferous in their opposition to the exams on behalf of their 1 800 members, repeatedly stating that the regulatory exam process should be “suspended until the format of the exam, the issue regarding language and the objectives to be achieved have been thoroughly revisited and agreed to by all affected parties.”
Early in April, a renewed flurry was created when the Insurance Sector Training and Education Authority (INSETA) to withdraw from its website any regulatory exam study materials due to concerns regarding the accuracy of certain sections of the material. While the issues around the INSETA study materials proved rather inconsequential, the response from the industry was not.
NAIFA commented, “We feel that it is imperative that the FSB re-look the entire process – and with the position now taken by INSETA on the exam materials – it would be absurd for the FSB to push forward with the current framework and exam process.”
The same day Fin24.co.za published an article titled Exams Threaten Financial Sector Jobs, claiming that “an estimated 300 000 people in the financial service sector may lose their jobs before the end of the year because of regulatory exams, according to an industry organisation”. It further quoted Phillip Matlakala, chief executive of Metropolitan Retail, as saying it would “have a negative impact on life assurers like Metropolitan operating in the low- and middle-income market, and on the industry’s ability to create jobs.”
This was followed by rumours that some of the large financial services providers are getting cold feet regarding RE, expressing uncertainty whether these exams should apply to their largely “tied” sales forces.
Challenges are numerous
There are indeed numerous challenges around the Regulatory Exams. The tight deadlines will indeed place many financial advisors under a great deal of pressure to study the extensive study material and pass the exam before the end of the year. There has been a great deal of confusion regarding the roles and responsibilities of the various stakeholders, prompting the FSB to publish the article “Forewarned is forearmed!”, which you can read elsewhere in this edition. The fact that the exams are only available in English, takes a “one-size-fits-all” approach despite the widely differing responsibilities across the industry. Despite these challenges, however, the regulatory exams are here to stay, and there is no way around it for financial advisors who want to continue practising in the industry.
The greatest obstacle of all
As one of our FAnews Online readers pointed out: the most difficult part of passing the exams “was to overcome the ‘resistance’ so many of us suffer”. This is indeed a sentiment that has been widely reported at all levels in the industry.
Another reader commented: “I have written and passed both RE1 & RE5 exams with self study. Being a bit of a conformist, writing these exams was never an issue, which probably put me in the right frame of mind from the start. Think about this... FAs who have successfully completed the exams are quite positive about the experience and their newly gained knowledge. Do not comment on these exams unless you have written them. Being negative is a personal choice.”
“I hope that everyone who has yet to commit to the process realises that with a little help, some determined application and a positive attitude, it is achievable,” wrote another reader who has already conquered the challenge.
Carel Nolte, head of People and Brand at Etana, concurs: “These exams are an important step forward and vital for the reputation and service delivery of our industry. Although it is a challenge, it is achievable with the right attitude. By replacing ‘scared’ with ‘prepared’, many Etana brokers and Etanans have passed the RE exams with scores above 80%.”
From scared to prepared
So how do you go from scared to prepared? According to Etana Academy Head Fatima Maharaj: “Don’t allow yourself to become demotivated and weakened by fiction. Before you allow yourself to be influenced by, or involved in, any of the current debates around the regulatory examinations (RE), make sure that you have all the facts. Take time to read the latest Financial Services Board (FSB) publication on the RE as it addresses the most common complaints. This will enable you to separate fact from fiction and rumour.”
The FSB has been firm in its guidance to financial advisors preparing for the regulatory exams. Their advice is to “stick to the source material” including the FAIS Act and its subordinate legislation. Financial advisors who follow this advice while preparing for the exam should have no difficult in passing.
In addition, there are many options available from product providers, broker organisations and training providers to assist financial advisors who prefer to prepare for the exam under expert guidance.
Just do it
Nolte says nothing important is easy. “All important advancements include fears of the unknown, hiccups and disappointments. We have to brave our way through. But we’re a smart, courageous and indispensable industry – vital to the entire economy and financial stability of every South African. Circumstances require us to up our game and pass these exams. So let’s buckle down and become even more awesome in the way we serve our clients.”
It is encouraging that there are financial advisors, too, who share his view, as reflected by some of the comments by FAnews Online readers below.
“Having completed both exams successfully last year, I encourage all advisors to focus on success and hard work. A positive attitude and determination will ensure you get through this milestone. After all, our industry is built on these tenets…”
“Anyone criticising the process or ‘marching’ on the FSB should first attend the FIA workshop, then judge the exam after they wrote it. Let’s be professional about this like we claim to be, Professional Financial Advisors! Those organising a ‘toi-toi’ are wasting valuable study time on their efforts to drum up a position of ‘we can’t make it’. I recon it is time to spend your valuable time very, very wisely. I have a practice to run and differentiating knowledge to go out and prove.”
Advice from the veterans
Many of those who have successfully passed the exams have shared their advice with our readers.
“My suggestions are as follows:
• Do not think these exams are similar to RFP 1-3 or CFP, they are not!
• Get your mind right about the exams - you have to do it, so do it as soon as possible.
• Study! You will not pass on general knowledge.
• Study! You are actually going to learn stuff which you have never known before, but should have.
• Practice good exam techniques - read and understand the questions and answers thoroughly before answering.
• Do not make the mistake of thinking multiple choice questions are easy.”
“To the representatives who need to write this exam, my advice is: prepare, prepare, prepare! It was very clear during the preparation that you need to read the actual legislation extracts in context with the Knowledge Criteria set by the FSB to clearly understand the objectives.”
“The most important thing to remember is to read the questions very carefully and focus on answering only the question as it is asked and avoid going off into stuff that’s not in there.”
“Read the questions really well and look for negatives and double negatives, taking your time to understand the exact meaning. If you prepare properly it is not as bad as all the naysayers would have it.”
