The new Albanese government is expected to address key issues in the advice sector and work with the sector. However, Peter Johnston, executive director of the Association of Independently Owned Financial Professional (AIOFP), said the current number of associations that exist will make that very hard.
On a new episode of the ifa Show podcast, Mr Johnston said there is “no doubt” the 13 associations that are currently active in the industry is too many.
“There’s 13 associations, it is ridiculous. Now, if you compare that to the mortgage brokering industry, there’s two. They both got on and they got it fixed.
“Canberra sits back and says, ‘[the advice industry] are just a rabble.’
“So it’s got to be rationalised. We go back about four years ago, there was 30,000 member advisers back then. Now there’s 17,000, there’s still 13 associations. Something’s got to give.”
Mr Johnston predicted that some will eventually fold or amalgamate with others.
New financial services minister Stephen Jones has maintained in recent months that he will look to make some changes in the industry, particularly when it comes to compliance and education standards.
Speaking on a recent webinar hosted by Stockbrokers and Investment Advisers Association (SIAA), Mr Jones doubled down on his earlier commitment to fix the “hot mess” that is the advice industry by introducing an ‘experience pathway’.
“We want to put in place a sensible, efficient recognition of prior learning arrangement so that if you’ve been doing the job for 10 years, you can continue to be a licensed adviser provided you haven’t got any black marks,” Mr Jones said.
He assured that if appointed, Labor “should be able to” enact the experience pathway “pretty quickly”.
On the same episode of the podcast, Mr Johnston challenged the incoming government to urgently address compliance concerns, saying “minimum 50 per cent” of the reforms introduced over the last few years should be axed.
He believes that the industry will best be able to work alongside government and enact positive change if it can be condensed and come together.
“So all we say to all the advisers out there, look at the association you just blindly signed up for the last 20 years,” Mr Johnston said.
“Look at actually who their priority is and what they’re actually delivering. And then we hope that there’ll be two or three associations left to ask people go through that exercise because 13 is just too many.”
Listen to the full podcast with Mr Johnston here.
All of these associations are doing a job and by not talking with each other they are just like one big dysfunctional family…Imagine if they all met in person to determine what they could all achieve for their members together as one UNITED voice instead of the 13 divided voices that they currently are…
And herein is the issue with our industry. Too many varied opinions and issues which is why our governments feel the need to determine their own interpretation of how our industry should operate. We are really quite pathetic.
Speak for yourself association no 14
Mr Johnston mentions that 4 years ago there were 30,000 “advisers” (incl pure risk advisers? -doesn’t say!) and now there are only 17,000 (risk too?). Well, with due regard to the rest of the article I’d say it is a storm in a teacup. Why? Because come 2027 there’ll be 5,000 advisers at best and, if lucky, a few hundred pure risk advisers. The compliance will kill the investment advisers, financial planners AND risk advisers but the risk advisers won’t have any remuneration left AT ALL after business expenses paid. Steven Jones will simply do as the industry funds and unions say. If you have been taking notice he’s said absolutely nothing that he can walk back without breaking a promise he hasn’t made. There’s nothing he’s “promised” that will make any substantial difference that he will or ‘can’ keep his word about. He can’t change the fact that thousands were unfairly forced from the industry with onerous compliance and punitive exam requirements. Will he compensate those advisers? hge will NOT increase commissions as the unions, special interest groups and super funds would shred him – the same entities who forced commissions down and clawback times up.
He should compensate advisers that spent hours doing the required qualifications for loss of income family time etc only to find out its now not needed.
There are 6 in tax and accounting, a person can get their tax agent license any of them. I think 6 of them is enough, the differences between them is marginal.
The FPA does not represent advisers. The only one that does is the AFA but they are not being proactive enough. They will get nowhere by having a coffee and a chat. They need to get out there in the trenches or pack up and go home.
If they cant consolidate at leaat have a peak body to represent the different associations. People have been pointing this out for years, of course the govt wont/cant listen when they have 5 didferent suggestions for the same issue. We need to make it easier for pollies to understand what we need/want and we also need to be taking awnsers to canberra not just questions. They won’t fix anything for us unless this happens.
The fall in adviser numbers will see this issue resolve itself. The associations will simply not be able to survive without consolidating. Ego and nuanced ideologies are the only things slowing it down.
The associations are involved in the outcomes so yes to consolidation for a better alignment of needs and objectives
We need a review of these bodies…A problem is that Advisers are misguided as to what their body does. As an example, the FPA is the Financial Planning Association not the Financial Planners Association. They for example represent all participants in the Advice industry, that includes the Bare foot investor, the girl on tik tok, the Adviser in a call centre. Somewhere in that mix is an actual Adviser. At the moment AwareSuper and TelstraSuper is driving the FPA bus, and they have very different needs and are big enough to look after themselves. They did well selling initials called CFP, selling a few lunches to advisers…. but they don’t represent advisers and are actively looking to other sectors.
The big question is why any adviser would fund the FPA.
Simple. I want my, I want my, I want my CFP.
Why would any adviser want a CFP, given it is so tainted by the grandfathers? (Other than those advisers who are the grandfathers of course).
FPA membership is likely to shrink to just grandfathered CFPs and product company stooges before long.
says a lot about those Advisers doesn’t it. Wonder what percentage join because they want to, as opposed to their employer paying for it, or they’ve joined to get three initials because they don’t have anything else. The FPA needs a bomb under it, as it’s being laughed at now.
don’t agree with this at all. Sovereign Super funds is the answer.
If that’s the answer, I’m intrigued to know what you think the question is?
While the total number of associations is of questionable value, parliamentarians have told us that for example, the joining of the FPA and the AFA would work against the advisers in Canberra as a single association has less impact than at least two have providing that on critical matters they convey the same messages.
Over recent years, the AIOFP have been invited to collaborate with respect to conveying the same or a similar message on particular matters and that hasn’t happened, possibly because the AIOFP believes that their different message on the particular matters needed to be voiced.
A guy who started a new adviser association arguing that there are too many adviser associations. Anyone else see the irony?
Yep. Perhaps his should be the first to go. Last in, first out approach!
When the numbers of ‘that’ organisation drop because they couldn’t pass the exam they keep bleating about – the organisation will lose relevance…
You can shut the FPA down. A complete waste of space – over the past 3 years it has proven to be an absolute Adviser small business killer.
Either the associations agree to consolidate to two or three in number OR planners take the initiative themselves and move to an association that works with them and recognises their past education and achievements. There will never be just one representative association but two or three is possible and a must if planners are to move forward.
Agree there is need for rationalisation of associations, but financial advice is not really comparable to mortgage broking in that regard.
Mortgage broking only has one significant product type. Financial advice has many. Some of the advice associations have their origins in particular product types, and others are still specifically product type based.
Mortgage broking has one remuneration model that is widely used and accepted. Financial advice has many. Some of the advice associations are based on specific remuneration models.
Mortgage broking is primarily comprised of small, independently owned businesses. Financial advice also has a lot of participants who are employed or controlled by product companies. Some advice associations cater to particular ownership/control situations.
Part of the reason there are so many associations in financial advice is that the industry itself is so diverse and fragmented.
correct i agree.