Addressing members at the association’s offshore conference in Colombo, Sri Lanka, yesterday, AIOFP executive director Peter Johnston revealed his association has recruited 49 individual advisers over a 10-week period – including a number of risk specialist practitioners – with many voicing disappointment with the AFA and FPA for their role in supposedly cooperating with the FSC in developing the Life Insurance Framework (LIF).
Mr Johnston said that while IFAs that are members of these organisations may be well-intentioned, they are also inadvertently helping to increase the political influence of the institutionally-aligned sector.
“All these advisers are doing is funding the enemy to act against their own interests. Being a member of [the AFA and FPA] gives them greater leverage to say that they represent the entire industry and not just those aligned to the insurers and institutions,” he said.
“When you get your next membership renewal notice, just ask yourself: who are you really supporting?”
While Mr Johnston has previously argued that the various adviser associations should be “homologous”, and that the AFA should stick to representing risk and life insurance advisers, he says the AFA’s role in working with the FSC to create the LIF means the former Life Underwriters Association has abandoned its core constituency.
“The AFA has proven that it is supporting life insurers and not risk advisers by caving to their demands on hybrids and clawbacks,” he said. “We are now getting an influx of risk advisers looking to join the AIOFP.”
The AFA and FPA had left the federal government with the misguided impression that all advisers support the LIF, he claims, reflecting on recent discussions with Small Business Minister and Assistant Treasurer Kelly O’Dwyer.
AIOFP chair and Beacon Group boss Peter Daly argued that the LIF negotiations revealed the true motivations of the two largest financial advice associations.
“The FPA and AFA are compromised,” Mr Daly said. “They do not represent the views or interests of the independent sector and we cannot rely on them to support our needs.”
Mr Daly indicated that while the AIOFP has sought to find common ground with rival associations in recent years – including through participation in a number of government-overseen forums – it cannot forgive the role these organisations played in allegedly succumbing to insurer demands during LIF negotiations. He argued that the AIOFP will instead focus its efforts on representing a “united independent sector”.
However, both the FPA and AFA have maintained that had it not been for their involvement in the LIF process, risk advisers would have received a less generous arrangement than agreed to in the LIF.
“We could [have] ended up with something like a nil commission [model],” AFA president Deborah Kent said in a communication to members in late 2015.
“There are still others out there that would rather see us have nothing, or [even] level commissions, which was [recommended] in the FSI report.”
In April, the AFA and FPA told ifa that their membership base is growing and member satisfaction is on an upward trend.
Jason,
You may be talking about a prior structure set up to provide a competitive platform to insto driven ones. That platform approach was exited 2 years ago as it achieved its purpose of making instos compete on margin and give existing clients on the platform the same deal as new clients.
If you are unaware of that detail then you are simply misinformed. Alternatively if you were then it is you participating in another unfortunate example of FPA driven misinformation. One we have all felt the consequences of with recent LIF lobbying.
The big two have dropped the ball and there is an opportunity for someone to step in and represent advisers
I could not agree more with this. Until the AFA and FPA stop being so heavily funded by the companies within the FSC they can never truly be impartial, independent or supporting the best interests of the end consumer or their members which is their constitutional duty.
The FPA and particularly the AFA did not have the support of their members when negotiating the LIF. End of story.
The LIF framework does not work for the consumer and is only within the best interests of the insurance companies and perhaps the few planners with high net worth clients. End of story.
And to Michael’s comments below if you think commission models are on the way out. Think again. You only have to look at the direct insurance carve out the FSC are trying to sneak into the LIF to realise that commissions will be thriving in the direct space. That is your competition if you are too naive to see that.
This is just ridiculous. Commission models are on the way out. People need to wake up and pay attention. The AIOFP may be presenting the view of its members but it is not doing its members any favours. The LIF framework could have eliminated commission all together and advisers would have had to charge fees.
Move on and adapt
Really? When can we stop this industry association bickering? There are so many other things that are better use of your time than spending time slamming each other in the press.
If the AIOFP want to get serious about uniting the independent advisers the first step would have be to stop advocating a model that whitelabels a platform and takes a margin off it at the client’s cost. Quality independent planners will never accept such a conflicted model and it begs the question how the “I” in AIOPF is even legal. Over 400 independent and not so independent advisers at the FPA lunch in Brisbane yesterday alone says the organisation is heading in the right direction. Red Tape is undoubtedly out of control and Insurance commission a very difficult area, but putting our heads in the sand and wishing for yesterday’s product gouge to continue and yes that includes admin platform margins as well as up fronts that aren’t compatible with modern lapse and replacement rates isn’t going to help!