The Association of Financial Advisers (AFA) has had a tough few years, having recorded a $2.2 million slump in revenue since 2018 to $2.8 million at the end of June.
This financial contraction reflected a decline in AFA member numbers, which over the last two financial years have rapidly dropped from 4,107 at the end of June 2020 to 3,664 on 30 June 2021, and most recently 3,292 on 30 June 2022.
At the end of financial year 2022, the AFA saw its net loss after income tax expand to $113,924 from $16,000 a year earlier.
The group explained that given its eroding balance sheet and having forecasted further pressures on stakeholders and downward trends within the advice sector, coupled with a long lead time to supplement the number of exiting advisers, the merger proposal emerged as a solution that promises to safeguard the long-term needs of the AFA members.
Commenting on the AFA’s results, national president Sam Perera said market dynamics and ongoing changes have heavily impacted the AFA and its operations.
“Consolidation, rationalisation and in some instances, the exit from the market of our traditional partners along with the significant decline in adviser numbers has placed pressured on our revenue,” Mr Perera said.
“Accordingly, we have trimmed our resources wherever possible whilst attempting to not compromise our services to members,” he continued.
Mr Perera explained that a confluence of the above factors has led to the AFA board recommending that the members consider merging the AFA with the FPA and a vote on the merger is expected to be held in the first quarter of 2023.
Moreover, he opined that the profession is finally “turning the corner”.
“The plight and the current state of the financial advice profession has been universally acknowledged by important stakeholders including regulators and legislators, and change is afoot,” he said.
“The Quality of Advice review presents a significant opportunity to realise much needed reform to enable practices to thrive, so we can increase the accessibility and affordability of sound financial advice for more Australians.”
Earlier this month, the Financial Planning Association of Australia (FPA) revealed it recorded a before-tax deficit of $1.2 million for the year ended 30 June, compared to a $1.3 million surplus a year earlier.
Its member numbers decreased 7 per cent over the reviewed period, while accumulated members’ funds followed the downward trend to reach $11.6 million at the end of June from $12.8 million a year earlier.
A Merger is like shuffling the deck chairs on the Titanic. At this point in time, they’re still totally clueless, they’re still out of touch with members, still don’t know who they represent and why. It’s 2022 and they’re still like “where do we fit in now”, They think a merger will fix the sinking ship.