Brokers are apparently whinging about having to do a compliance (read competency) test to stay in the industry. Find me an industry that doesn’t require some form of test of competency to be in it.
Some of the nation’s most prominent stockbroking firms are railing against a mandatory ethics test that has resulted in mass failures, arguing it is misguided and discriminates against the most experienced industry professionals.
No – it discriminates against people who fail the ethics test, that’s what it’s designed to do.
Two industry sources who both spoke on the condition of anonymity because they were not authorised to speak to the media said staff at prominent firm Bell Potter had a 100 per cent fail rate at the November exam. Bell Potter declined to comment. Meanwhile, more than 60 per cent of brokers at Shaw and Partners also failed the exam.
Doesn’t surprise me.
Mr Sheahan said the fail rate was highest among stockbrokers who had the most experience, adding it would be detrimental to the industry and broader community if these brokers were booted out. “Stockbroking is an experiential career. You learn more about markets everyday or every time you go through another tech crash or GFC.”
The problem with this statement is that they are learning not with their own money but with other peoples. As a broker once said to LB I can learn about options with your money. And this unfortunately is the attitude – brokers have no skin in the game as their performance is not linked to profitability but rather sales. Events such as the GFC are in my experience seen as something of a bonanza as you get clients panicking to sell or you convince other clients to buy into the collapse using the not so genius strategy of averaging down.
FASEA chief executive Stephen Glenfield said the exam asked participants to apply an ethical lens to range of scenarios and did not require technical knowledge. He rejected calls to create an industry-specific test, but said the next exam results will include more granular feedback after receiving complaints from the industry.
This is the central issue – it is a test of ethics.
Stockbrokers should be thankful they don’t have to sit the old SFE Registered Representatives exam since that involved actually using a calculator.