Speaking at the association’s national symposium in Canberra, Mr Brammall reflected on the IFAAA’s 10-year journey which started at an FPA Congress in Sydney in 2007.
After a keynote address in which former Woolworths CEO and business luminary Roger Corbett criticised the financial advice industry for its primary business model of investment commissions, Mr Brammall became dismayed at the kneejerk response of his fellow FPA members, who “attacked” Mr Corbett and denied his assessment of the industry.
“It was a significant day for me. I left the room disappointed. I decided to resign my membership of the FPA and hand back my CFP,” Mr Brammall explained.
Asked whether he believes the FPA has made sufficient changes to its own operational model in the past decade to be deemed a professional association, the former member said he was unconvinced.
“I would like to be a member of the FPA again but I have not yet seen the change that I’m hearing,” he said.
“The FPA does a lot of great work and a lot of our members are members of the FPA. But the conversations I have had with them haven’t led me to the conclusion that they are prepared to lead in the way the public and the community requires leadership.
“It’s not just the FPA, all of the other associations still have conflicts of interest.”
The fact that a majority of mainstream association members are still “involved in some shape or form with a vertical integration arrangement” precludes the possibility of support full professionalism, Mr Brammall said.
“If they announced they were going to do what we do in terms of our professional standards there would be a mutiny,” he said.
The comments come as the IFAAA has announced it will rebrand as the Profession of Independent Financial Advisers and seek professional association status from the government’s authorising body.
The IFAAA national symposium did not have any corporate sponsorships or endorsements in place.
As we saw with the LIF the FPA and AFA are just paid for extensions of the FSC with no voice and no thought about what would be best for the end customer.
We have a Royal Commission coming up but sadly we do not have any “professional associations” that are not conflicted financially. Until both the FPA and AFA stop taking the bribes from the instos they will never be professional.
FPA Members should be more concerned about two issues:-
* a member association that has no obligations to the very members who fund it’s existence
* the changing make up of the FPA Board, where the FPA is now effectively controlled by the 300 member Boutique Financial Planning Principals’ Group.
If the FPA board is gradually being taken over by BFP members that would certainly be progress in the right direction. I think you may be overstating their current level of influence though.
Just because I choose to belong to a bank owned dealer group. It doesn’t automatically follow I am going to recommend their proprietary products over others. In fact in my business the reverse is true. We actually put the dealer group related products through a more rigorous process of DD before choosing our preferred platforms and insurances.
I do however concede that perception is a big issue, and we may always be tarred with the same brush as bank employed advisers, who lets face it, have in the main submitted to in house directives around what products should be recommended.
Add to that the double dip on high fees and commissions and you see a pattern emerge where remuneration targets also add to the pain for the poor old bank consumer.
I have always held the view from Day 1 that Banks owning life companies and fund managers was a major conflict of interest, and further more the absolute worst people to operate them. They are profit (shareholder ) driven to th exclusion of anything else.
No one has a problem with your relationship with a bank owned dealer group Goanna when it comes to FPA membership. The question is should the FPA be receiving money from Banks, IOOF AMP etc etc and then be submitting policy to the Government. The FPA should be working for Goanna and Australian consumers. Getting payments has the perception to create a conflict. Furthermore giving certain members a 10% discount based on the product manufacturer they work for creates a distortion in the member base. The FPA has the rights to the CFP logo and as easily given they can be taken away.
To the IFAAA’s “Gold Standard” of advice…..remember all that glitters is not gold….sometimes, it may even be fools gold !
Do you have any evidence for that Anon or are you just casting mindless aspersions?
I don’t often find myself in agreement with Danny Brammall, particularly on the position of risk commissions, purely because they enable people to get quality advice without having to front up with fees in excess of $2000 just for the advice.
But he is spot on about our “professional bodies” taking sponsorship from insurers and fund managers, whether it’s for conferences or directly to the Association. , Whichever form it takes the receiving Association must be conflicted.
Both organisations have also been guilty of getting into bed with vested product manufacturer interests who undertake membership “drives” with the advisers under their control, with of course a 10% bulk discount, but a certain element of compulsion. I expect to find that the CEO of both the organisations collected bonuses for increasing their memberships past low-set KPIs and neglected to realise that no business will sponsor an association without extracting a favour. Or did not care !!!
I found it extremely galling that one of the principal advocates of nil commission for risk products at a bank owned insurer was also responsible for pumping large amounts of membership into an adviser association which purported to represent the very people who would suffer revenue drain if the policy position of that particular person ever became law. Yet apparently no questions are asked.
Both adviser organisations have latched on of the “professional body “ bit apparently without realising that they have an obligation to consumers of advice as well as their adviser members. Both organisations now have a responsibility to run a lean and mean staffing arrangement dedicated to the critical service elements important to advisers and then calculate a membership fee to pay for those services that advisers want. And if advisers vote with their feet when fees are increased , then the relevant Association will just have to agree to give advisers what they want, not what the office bearers think they need, and not hide behind the compulsion to be a member of a professional association.
The FPA receives a lot of money through corporate sponsorship and the majority of FPA members belong to vertically integrated / institutionally owned dealergroups which means much of the membership income is likewise directly or indirectly funded by banks, let alone the under-the-table payments received by the FPA through the business partnership program etc. The FPA is totally conflicted and as we saw in the LIF debate, the FPA were on lock-step with the FSC and may be considered in effect just an arm of the FSC. You would join the FPA just to support the banks. The final betrayal was the announcement earlier this year that the FPA will no longer advocate or fight for its members or the industry; in fact not even to step-up to be a professional association, no the FPA is now just a standards organisation to police advisers!
It’s time for change. We want real leadership now, otherwise we’re just going to be hit with more red tape and more compliance as a result of a Royal Commission. We cannot leave our fate in the hands of groups like the FPA and AFA otherwise we’ll be left with Optin, and LIF again and the requirements to have a Masters degree in Rocket Science and a Phd in Financial Planning and worse more Australians unable to afford advice due to 4000 page advice documents and an increasingly divide in planning groups. How about an attempt to self regulate to avoid over regulation? That is what essentially what these bodies should be all about.
So why not just a few simple things now to ward off this red tape? Before we put Daniel down we should thank him for raising an important issue.
Firstly why shouldn’t say AMP or Hesta sponsor an FPA conference. It’s very clear that say AMP is paying for lunch and participants can make there own conclusions. What I have problems is with (1) the FPA getting undisclosed payments via the professional partner program where they receive Cash in order to have a say in policy settings, treasury submissions and the direction of advice in Australia, (2) they don’t disclose this and bundle it in as members fees and (3) those very same members getting a 10% discount on members fees. The simple solution, if they were concerned about the loss of revenue would be for the FPA to dump the Professional Partner Program and replace it with non product manufacturing corporate supporters such as BMW, Qantas, Virgin, very similar to the Victorian Medical Association. I would suggest we start getting the house in order prior to a Royal Commission.
Such a pity Daniel had to relinquish his CFP when leaving the FPA. CFP is not an FPA specific designation, it is an internationally recognised designation for which FPA has the Australian rights. Unfortunately FPA has devalued the CFP in Australia by giving them away to people with less than degree level education. It is time the Australian CFP rights were transferred to a more professional and less conflicted organisation.
that time will come perhaps. It would not be too hard to call a special general meeting and surrender this right. You’d just need enough member votes to out vote the staff and directors of the FPA that could be bothered to turn up. I guess you’d just need say 22 members of both the IFAAA and the FPA to do it and vote to surrender the rights….mmmm i wonder..
Good thinking. Maybe even the threat of this would be enough to finally make the FPA revoke CFP status for grandfathers until they complete CFP level education, and get rid of the dodgy deals with institutions. It seems most members actually want the FPA to become a proper professional association worthy of controlling the CFP designation. But the current management and directors seem unwilling to take the necessary steps.
Whilst I am a member of the FPA, I don’t consider it to be a professional body, just an association; i.e. as in its name. The reason being is that it does not inspire to put the public first; that would call for the removal of commissions, percentage based fees, vertical integration models, etc. But the FPA is probably a good association for some financial planners.
Meanwhile the FPA has just published lots of photos on its website of members frolicking with BDMs at product company sponsored parties during their “Professionals Congress” in Tasmania. Really FPA, isn’t it time to move beyond this?