Is Canberra concerned over multitude of associations representing advisers?

Following their meeting with a Treasury department tasked with overseeing the government’s response to the Quality of Advice Review, the Association of Independently Owned Financial Professionals (AIOFP) has revealed that politicians and bureaucrats are “dubious” about the multitude of associations representing the advice community.

The AIOFP has urged the government to take corrective action by initiating a “due diligence” process to address the perceived issue.

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“A critical issue that needs addressing is the confusion and bewilderment in Canberra with the number of different associations supposedly representing the advice community,” the AIOFP said in a document emailed to ifa.

“Politicians and bureaucrats are justifiably dubious of this malaise, but we argue that Canberra must initiate some due diligence and take responsibility for who they are actually dealing with.”

The group further explained that the financial services industry can be broadly categorised into two opposing functions, namely product manufacturing, and advice, which inevitably leads to conflicts of interest, making it impossible for an association to represent both advisers and institutions simultaneously.

“Over the years, too many associations have entered the advice space masquerading as representatives of adviser interests whilst being subservient to the banks and pushing the banking agenda. Other associations who are not involved in either advice or manufacturing products are trying to have a say. We respectfully suggest these associations should stay with their core activities in their own industry,” the AIOFP said.

Peter Johnston, the executive director of AIOFP, provided additional context in a recent conversation with ifa. “What people don’t realise is that our industry is divided in half, with product manufacturing and advice,” Mr Johnston said.

“We think it should be three associations maximum because all it does is muddy the waters.”

Haydn van Nek, operations manager at Kelly Wealth, recently shared a similar sentiment with ifa, explaining on a podcast that the advice industry is in dire need of a prominent industry voice that doesn’t act only as a mouthpiece for the regulators.

This voice, Mr van Nek said, needs to be on the ground in the communities promoting the value of advice in the Australian financial system.

“You know, like the Pharmacy Guild. You don’t have to be a pharmacist to know about the Pharmacy Guild, but that doesn’t feel like it’s the same in our industry,” he explained.

While Mr van Nek believes the proposed merger between the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) could be positive.

“I think that the AFA and the FPA merger might assist with that rather than having multiple groups.”

Earlier this month, the FPA and AFA announced they had legally completed their merger to form the Financial Advice Association Australia (FAAA).

Just prior to the official merger, the FAAA’s chief executive officer, Sarah Abood, said the merger had been warmly received by senior members of the government and opposition, particularly Minister for Financial Services Stephen Jones, and the shadow minister for financial services, Stuart Robert.

“Both of them were very, very pleased about the merger. They offered very sincere congratulations, they had big grins on their faces, and they both made the point that, for them, this made a huge difference to their ability to engage with the profession,” she said.

“They felt that they could come to us and get an answer as to what the profession thinks and what the profession needs, so I can’t state strongly enough how very important that is.”

ifa earlier questioned Ms Abood about possible further mergers in the industry, to which she replied: “We need to get this one done. We need to make sure it’s right and it’s delivering for members before we start to think about what might be next.”