Examinees need wider client behaviour view

FASEA behavioural finance

FASEA exam candidates who have struggled with questions on behavioural finance are typically viewing it too narrowly.

Financial advisers sitting the adviser exam should not perceive behavioural finance questions in black and white terms and take a broader view of how a client may think or what they want when seeking advice, an expert in the subject has advised.

Behavioural Finance Australia director Simon Russell said despite limited feedback from the Financial Adviser Standards and Ethics Authority (FASEA) in the past, the authority has revealed behavioural finance remains a complex topic for candidates sitting its adviser exam.

“When FASEA has given feedback, they have said of the people who have failed, the areas that they’ve done poorly is behavioural finance and client engagement, such as understanding clients and engaging clients,” Russell said during a presentation at yesterday’s SMSF Association Virtual Technical Summit 2021.

“From memory, about 20 per cent of the competencies tested in the FASEA exam relate to behavioural finance aspects.”

He encouraged financial advisers to gain a deeper understanding of behavioural finance as the candidates who found no problem answering the questions either had completed a bridging unit or related the question to real client experiences.

“I do get people who say: ‘I found the topic difficult and subjective and didn’t know really know what they were getting at.’ I think that people who found that difficulty with the exam was because they were looking for a black and white answer,” he said.

“If you’re looking for something that’s going to work for all clients in all circumstances all the time, you’re probably not going to find it. So when reflecting on behavioural finance, what we’re trying to do is to find what’s most likely to work for most clients in a particular circumstance, with a particular outcome in mind.

“We have to be thinking in shades of grey for a particular client. Some of the stuff that we’re talking about is not going to work for everybody and it’s not going to work all the time. But what we can do is find what’s going to work for most people and be in their best interest.”

Financial advisers looking to sit the FASEA exam will have until 20 August to book their place for the September exam, while the final exam available this year will occur between 4 and 9 November.

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