At the association’s closed-door annual general meeting at the national conference on the Gold Coast last week, it was revealed that expenditure exceeded revenue at the association last financial year.
Speaking to ifa, AFA chief executive Philip Kewin confirmed the financial situation and said the additional expenses incurred related to costs for “professional services, CEO and senior management transition costs and an extraordinary general meeting”.
Several AFA members, speaking to ifa on condition of anonymity, expressed concerns over the professional association’s expenditure, questioning whether the blow-out was necessary.
“The former CEO [Brad Fox] completely messed our financials,” one veteran member said.
“He was spending like crazy.”
Another member expressed concerns that uncertainty around the impending introduction of professional standard requirements could mean many of the supposedly “one-off” costs attributed to the overspending could be incurred again in the coming years.
The member added that there appears to be no contingency plan for this scenario.
However, Mr Kewin said the AFA is readying to fix the situation, with the budget for 2018 reflecting “the necessary costs involved in running the association” and added that any additional costs incurred by changes in regulation would be incurred by the industry as a whole.
“In terms of the future, the increase in regulatory costs will be something that is borne across the entire advice profession, impacting advisers, licensees and manufacturers,” he said.
“Of course, professional associations will be no exception as our responsibilities will also increase as a result of professional standards legislation.”
Mr Kewin did not respond ifa’s request for specific numbers relating to the organisation’s financials.
The AGM also saw a number of changes to the association’s constitution passed unopposed.
Having been at the meeting I think members were allowed to ask appropriate questions and they were well answered though David was thrown under the bus as new treasurer. Loss was not substantial and already in their first quarter they are back in the black. If anything AFA should increase its fees marginally to make sure this doesn’t happen again. $20 a member and they have a proper cushion.
We need good representation and with Phi Kewin and Phil Anderson in there we are getting it. Good bodies cost money so stop trying to starve them and then complain they aren’t doing enough.
With LIF effectively killing off advice practices that rely solely on insurance, and the new education standards driving out advisers without a degree, how many AFA members will be left in a few years time? Is there any reason for it to still exist? The politicians and insurance companies certainly don’t take any notice of it. Perhaps now is the time to stop throwing good money after bad, accept the inevitable, and shut up shop.
Let’s give the AFA a break. Associations in general operate on a shoestring budget that relies on sponsorship from product manufacturers and distributors which also helps to keep membership fees at a minimum. Whilst there are many critics of the LIF outcomes, it was a case of ”let’s make the best of a bad situation” with the knowledge that it could be made worse if Labor get elected. Representation costs $$$, but there should also be appropriate governance over member funds. Let Phil Kewin have 12 months at the helm with an FY 17/18 budget that he helped set and then he can be fairly judged on financial performance and member representation. And yes, all Board members should complete directors training such as that offered by the AICD.
The worst case in recent history was the CPA’s failed licensee. Interestingly I do not see the actual red number for the AFA disclosed in the media. The FPA as stated also had a $2,000,000 loss.
What gets missed in each and every case is the lack of the professional sales person that drives revenue. None of the above, saw this as a consideration.
As a member of the Afa for twenty seven years and listening what was going on l believe that brad fox should have been told what the hell is going on when I read all the comments about past presidents he has turned out to be the worst I believe the police should be called in because we know what has been going on let’s hope the present board try to hide all the facts we should know as members were the money has gone
This revelation regarding the AFA’s handling of members funds warrants an Enforceable Undertaking (EU). It would also seem to indicate that all present and future AFA Board members be compelled to undertake and pass the Australian Institute of Directors (AICD) Company Director’s course before taking up their positions.
This delinquent behaviour should never happen again.
Knowledge of the overspend was known long before the the Annual General Meeting and the Association has chosen to keep quiet about it until forced to disclose it.
Q1. Why did the AFA remain silent until now?
Q2. When did the AFA become aware of it?
Q3. What did the AFA do to rein in spending, if anything, to reduce it’s impact?
Q4. Are the AFA going to trim programs or raise subscriptions? The latter I would expect
Q5. Who in the AFA is going to be held account by being “let go”?
If, as hinted, the blame is being placed at the foot of the previous CEO, where was the Board (as a whole) and where were individual AFA Board members hiding when this overspending occurred. Asleep at the wheel or complicit.
We as Financial Planners are required to be licensed and have passed educational training and yet how many of the AFA Board have done the AICD Company Directors course?
It would be inappropriate for the AFA and Mr Kewin to be transparent and forthcoming about ifa’s (or more particularly AFA members’) request for specific numbers relating to the organisation’s financials. This is because such integrity would be inconsistent with their behaviour over the years.
Is there theft by ineptitude.
The AFA website says that
AFA Financial Advisers are
Trusted
Knowlegable
Reputable, and
Respected
The same cannot be said of the AFA. Maybe they are Knowledgeable.
I would like, as would a number of my peers, to resign from the AFA but am forced to belong to the AFA or FPA whether I like it or not. Both are a bad choice.
I think that although the AFA has failed to manage ‘our AFA’ they have been shrewd enough to appoint Phillip Kewin. Kewin realises that he must stay schtum about ‘our finances’ because his first responsibility is to the Board and his own position, knowing that he owes the members nothing.
Not much different to the last guy.
So Brad Fox screwed all the members on the LIF, made the AFA pay Trowbridge a very big sum for the privilege, now we find behind closed door his administration screwed-up the AFA’s financials and has left the IFA insurance industry (the origin of the AFA) in tatters. What a farce!!
Wow. This is simply ridiculous.
So Brad sold out advisers and blew the budget. I just cannot understand the point of membership with either the AFA or FPA
That’s the big issue the AFA & FPA are facing…relevance and the sourcing of income.. It’s compulsory for many now given PI insurance and also TPB requirements. However there is talk come 2019 (or some similar date) when advisers will be responsible for own CPD training that this requirement will end. With Degree requirements Me thinks we’ll see many leaving these associations and that’s the scary thing for the FPA and AFA. Not only that with the recent Magellan ASX version for example you’d think the need to give payments to the FPA will decrease as the funds managers market direct to the consumer.
dear self respecting advisers would you please cancel your membership of the AFA or FPA, they are useless
This is has been a concern of mine for many years. Many of their members moved away from commissions and payments from product manufacturers as they didn’t like seeing their income drop during sharemarket falls and it was also legislated via FoFA. Yet here we have one of our so called professional associations getting the majority of their income from factors outside of their control and not directly from members. They are dinosaurs living in the 80’s and the way they earn there income is out of step with their members.
This is the problem when you get the majority of your income from factors outside of your control via Product Manufacturers. We saw the FPA dodge this bullet this year by crawling cap in hand to the CEO’s of the big banks saying if you pay us money we’ll let your advisers be members and you can blame financial planners for your woe’s. It’s only a matter of time that they also are in the same situation. So the solution for the AFA and in particular the FPA is to go back to the drawing board and “wean” themselves off product manufacturers funding via the professional partner program and grow their membership base by becoming the professional association we want and deserve and derive their income from more predictable revenue sources such as membership fees, like other professional organization that rely solely on members fees.
Interesting times ahead for “partnership” payments when you see the consolidation in the industry… What happens to funding from ANZ Wealth, CommInsure/CFS, Asteron up for sale, Macquarie Life gone, they all wrote big cheques… interesting times ahead!
It’s a real shame that the peak body for financial planning cannot, seemingly ever, properly plan it sown finances.
Yet advisers get very touchy when anyone questions their capability to guide others through their financial future.
Peak body? I don’t think so.
Gee, maybe they need some financial advice??
So here we go again. When the FPA was run by a one Ms J Bloch, the loss was a staggering $2 Million. Now the AFA has extraordinary expenses which blows the budget. Our clients are reminded by their advisers to live within their means. So, ought not a peek association for the industry do likewise? Commercial agreements related to management need to be visited to tie them down to performance and not reward them for incompetence. Tail wagging the dog to now say to members of the AFA that woops, we goofed. Commercial reality states that you look after members interest and deserve the remuneration for efforts. As to Mr Fox, he essentially sold the IFA members down the river and last years revelation as to remuneration he received for doing so, gives the appearance of nepotism as he appears to have colluded with folks at the FSC to get advisers where we are today. The FPA also has done likewise. Enough said, it is time the members of the AFA and FPA DEMANDED complete transparency on ALL figures in financial statements and put the board members to these associations under a very big microscope. We as IFA’s are been compromised at every turn. What sort of board in the corporate world let alone stakeholders that are shareholders to public companies would tolerate this nonsense. More transparency and accountability is what is required. This is not only for the statements of these associations but to restore respect to an already wary public of us as IFA’s. I for one am disgusted by the ineptitude of those charged with running a professional body now appearing to once again fail in their obligation to us as its very members. This will not help the credibility factor for our industry. Again !
Didnt AFA recently receive a cash injection with a huge number of advisers seeking membership due to the TPB renewal requirements. ?