The accounting industry association and its leadership is under considerable pressure after announcing it will hold its annual general meeting in Singapore, the latest in a string of decisions made that have angered sections of its membership.
PwC managing partner Joseph Carrozzi for example took to Twitter to describe the AGM location decision as a “farce” that reflects poorly on “bean-counters everywhere”.
A petition is currently circulating among members that would see a number of reforms introduced, including reduced compensation for high-profile CEO Alex Malley and other directors, and greater transparency on the progress and funding of its CPA Australia Advice licensee. The document has attracted more than 100 signatures so far.
According to ASIC data, the licensee – which mandates compliance with the Corporations Act definition of independent advice – has attracted just 19 authorised representatives since the press conference in June 2015, during which Mr Malley appeared alongside ASIC chairman Greg Medcraft to launch the new subsidiary.
The relatively slow progress comes despite a $1.15 million loan made from CPA Australia to the advice business, detailed in the 2015 annual report, and an alleged 600 expressions of interest in the days following the initial announcement.
Speaking to ifa, CPA member and business owner Brett Stevenson said the financial advice business is one of a number of concerning issues among the membership.
“We want more information on the CPA financial planning arm,” Mr Stevenson said. “The pub test suggests this needs a closer look.”
In particular, the CPA member suggested whether the current spend on executive leadership of the advice arm may be excessive given the relatively lacklustre take-up rate.
More broadly, Mr Stevenson suggested CPA’s marketing initiatives have not been supported by the bulk of the membership.
“They are all about promoting Alex Malley,” he said. “This approach does nothing for members and nothing for the profession.”
I’m not sure it’s the wrong strategy but perhaps way to early. They must have thought that all those accountants at Count, Centrepoint, Securitor would flock to them.. the just forgot about all the volume bonus payments and legacy trail that would be lost when they moved. Regardless of what you think of those conflicted payments it’s hard for any business owner to leave tens of thousands of dollars on the table on the way out.
Michael, a fair point, but even if conflicted payments weren’t an issue, CPAA’s CVP is still not convincing.
Most of these practices are mature businesses, so if the status quo works, why change it? I can only think of the following:
– Your AFSL has severe reputational issues (i.e. a listing or sinking ship)
– OR, your *existing* clients are leaving, voting with their feet (to go where by the way?)
– OR, you’re a growth business and CPAA is a great differentiator.
So if these factors do not apply, I’d think there is little reason to go through the massive hassle of changing AFSLs. Especially where the new licensee has NIL track record in AFSL management (compliance, technology, research, product, technical, finance, business development). It’s not like they poached an experienced management team from somewhere….
An after-thought. Given the AFSL investment v the number of advisers (19), you sure as hell would hope there are no compliance issues…..
Can you imagine the amount they’ve had to fork out to software companies? No wonder Iress has been trending on the ASX. The salesman no doubt will not be an advocate for clawbacks
only in financial planning are you looking over your shoulder to see if the work you did for a client 2 years ago will come to nought. Just imagine politicians having their pay docked every time a law was repealed…
One of the great ironies in all this is that Medcraft’s public canoodling with accountants while simultaneously persecuting and bad mouthing financial planners, has sent the message that ASIC won’t be too bothered about enforcing those irritating rules as far as accountants are involved. Therefore very few accountants have bothered to get licensed. With CPA or anyone else.
CHOICE’s member services went dramatically downhill when they appointed a self absorbed media tart as CEO, and it looks like CPA has made the same mistake.
If I could buy Alex Malley for what I think he’s worth and sell him for what he thinks he is worth, I would have to hire an accountant to try to manage my significant Capital Gains Tax bill!
Look at the numbers, CPA Advice WILL NOT survive. 19 members x max fee of $23,232 = $441K. Staff of 20 (AFR 21/2/17) x average wage of $80K (low-end guess) = $1.6M. A shortfall of nearly $1.2M, not even counting legal costs, PI, office rent, etc. It has been almost 2 years now. The only question is how long the CPA members will tolerate this situation.
With all the drive around being transparent its about time they did the same for their members and start disclosing how much the members are subsidising this venture.
Anyone who has been taking notice of Alex Malley’s stratospheric level of self promotion across multiple media vehicles over the last few years will completely understand. It’s about building the Alex Malley brand.
CPA could well stand for “Currently Promoting Alex.”
If I were paid $600,000 p.a. to look after 19 advisers I’d happily advocate independence too. Must be incredibly commercial advisers to support what is undoubtedly a strong AFSL service….
LOL…