Financial institutions maintain dominant influence over the FPA despite recent revelations about the professional association’s business model, the AIOFP has speculated.
Yesterday, ifa reported comments by FPA chief executive Dante De Gori that indicated his organisation now derives as much as 95 per cent of its revenue from the membership, meaning just five per cent comes from transactions with commercial partners including financial product providers, licensees and life insurers. In response, Peter Johnston, executive director of the Association of Independently Owned Financial Professionals (AIOFP), told ifa the FPA’s business model is irrelevant given the dominance of institutionally-aligned advisers within its membership – itself a latent form of political influence. “Whether the revenue comes directly from the institutions or via their vertically integrated distribution networks, it is still money sourced from the [institutionally-aligned] majority of its membership,” Mr Johnston said. “Many institutions make it mandatory to be a member of the FPA to exert their commercial influence. It’s about time the ‘elephant in the room’ is exposed, the FPA represents the institutional faction - why even bother to portray themselves as anything different? It is an insult to the intelligence of the adviser community.” Mr Johnston also questioned the 5 per cent figure offered by Mr De Gori, arguing that with the membership fees derived from institutionally-owned or aligned firms, alongside the event and education sponsorship deals, the figure is likely to be much higher in reality. At the same time, he conceded that the FPA has “done some good work for the industry as a whole”, but added that it only supports adviser interests when they coincide with the interests of the major financial product manufacturers. Mr Johnston also reiterated his previous argument that independent and non-aligned advisers that are members of the FPA and AFA are acting against their own self-interest. “The recent LIF fiasco is a prime example where the presence of independent and independently-owned adviser members were used by the FSC, FPA and AFA to act against them with the politicians,” he said. The AIOFP has long advocated that advice industry associations should be “homologous” i.e. that the respective groups should stick to their own patch, with the FPA representing the institutionally-aligned sector, AFA representing life and risk insurance specialists and AIOFP representing the independent and non-aligned community.
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