I encourage my students to enter exams, competitions and auditions: it gives an independent assessment and encourages practice - after all, no-one would turn up deliberately unprepared for an exam or a festival. Exams and competitions are not for everyone, but I find that those who don’t play in public and don’t take exams, suffer from two side-effects:
they tend not to resolve difficulties in pieces (on which progress relies), and
they do not usually follow a balanced syllabus: I think their rationale goes something like this. "Scales and sight-reading aren't as satisfying as learning pieces; I don't see an immediate benefit, and since I'm not doing exams, I'll miss them out for the time being". The time-being of course stretches for ever.
The apprehension that naturally comes with testing is offset by the sense of achievement that comes with passing. Even the cloud of failure sometimes has a silver lining - failing is often the catalyst for addressing the difficult decision to stop lessons, change teachers, or to reflect on the student’s own preparation (or more likely the lack of it!).
If these philosophical arguments don't convince you, then take a look at this article from the Associated Board about how exam passes at higher grades earn UCAS points:-
ABRSM - using your UCAS points
Fergus Black coaches students for auditions for local schools, music theatre groups, choirs, as well as national music schools, stage schools, and group. His students have successfully auditioned for:–
National Youth Choirs of Great Britain,
Chetham’s Music School,
The Purcell School,
National Youth Music Theatre,
Stage schools, including LIPA, East 15, etc.
Among the local music organisations, he tutors candidates for
Stamford Endowed Schools Music Scholarships,
King’s School Peterborough Music Admission,
Peterborough Cathedral Choir audition