Hardly a day goes by when you do not hear criticisms of the financial advice sector’s industry and trade associations. The comments section of ifa is a good barometer of the industry’s opinion on a range of topics, and news about or from the various industry associations is always polarising, with much of the feedback decidedly negative.
The associations, and their executives, are effectively the industry’s political representatives and therefore it’s understandable that members (and non-members) direct a certain ultra-critical gaze towards these bodies. It would be un-Australian not to.
Moreover, with many financial planning businesses struggling, it is incumbent upon these representatives – as well as dealer groups, consultants and any other external service providers – to be continually demonstrating value, so that advisers can justify the membership fees.
Many of the issues raised by critics are valid, whether it is a concern around membership costs and services offered, deals struck with commercial entities or the process by which awards are handed out. ifa does not always see eye to eye with the associations and plays a role in holding them to account.
However, overwhelmingly, criticisms of the industry associations belittle the fundamental role these lobbyists have played in achieving policy outcomes favourable to the industry.
In a statement issued last week, financial services M&A consultant Paul Tynan said the industry was suffering from an “overabundance” of industry lobbyists, and that many of these “special interest groups” – in which he included the associations – put the interests of their members ahead of those of “consumers” and the industry as a whole.
Mr Tynan also took the opportunity to call for “balance” in the industry between competing interests, business models and advice philosophies.
It is undeniable that the financial advice industry has more associations and bodies representing it – and all of its sub-sections – than perhaps any other Australian profession.
At times, the multitude of interest groups and factions can seem almost comical, like a modern day incarnation of the ‘Judean People’s Front’ and the ‘People’s Front of Judea’ from Monty Python’s Life of Brian.
While Mr Tynan makes some good points about the need to re-define “aligned” and “non-aligned” advice and strike a balance between red tape and consumer protection, any changes in the way the industry is organised or defined will invariably be brought about by the industry associations and their lobbyists.
Assistant Treasurer Arthur Sinodinos may well say there is a direct consumer benefit from the amendments to FOFA – and insofar as cost reductions in advice fees are passed on to clients, this may be true – but he has also made clear that it is “representations” made to his office that has put many of these issues on the agenda.
The realpolitik is such that lobbyists are now an essential part of the democratic process. In Australia, they are regulated, either as official lobbyists on the Australian Government Lobbyists Register or as registered associations, which are permitted to lobby government on behalf of their members.
Furthermore, political lobbying is but one of the lobbying services provided by the industry associations in our sector. One can hardly imagine a stereotypical Washington, DC lobbying firm pushing for higher education standards or offering pro bono advice services.
While it is true that the lobbyists representing financial advisers are many and varied – and might do better if they worked together more often – it is also true that they have proved their worth over the past 12 months.
From TASA to Enshrinement to the FOFA amendments, those representing retail financial advisers have battled more powerful entities and interests such as the trade unions and, sometimes, major financial institutions, to reduce red tape and help foster a community that is profitable and influential.
Westminster democracy inspires a natural scepticism of those who put up their hands for public life.
But perhaps the ‘overabundant’ commentators in this space should accept that sometimes actions speak louder than words.
I don’t think that we will ever get a complete sense of the lobbying muscle exerted by industry funds under Labor – witness their distress at the prospect of truly independent or suitably qualified directors on their boards.