Yesterday, ifa exclusively revealed the CEO compensation packages of the FPA and AIOFP, following a poll that found that 94.7 per cent of advisers believe the professional associations should disclose this information to the public.
AFA CEO Philip Kewin directed ifa to its most recent annual report, which explained that total staff costs in 2016 were $2.2 million, but said it was not the board’s policy to disclose individual salaries.
Speaking to ifa, Wayne Leggett, director of Fortnum practice Paramount Wealth Management and a former AFA national president, said a change in policy on this issue would be in the association’s best interests.
“I’ve always held the view that the remuneration of office-bearers in any [not for profit], be that a charity or an industry association, should be disclosed,” Mr Leggett said.
“Notwithstanding that it may currently be their policy to not disclose, it would be in the best interests of the AFA that they look to amend policy to allow this to happen with some haste, especially in the wake of the AIOFP and FPA making their CEO remuneration public.
“Subscribing members are entitled to know where their subscriptions are being spent, with executive remuneration being a key component of such disclosure.”
AFA member and LICG figure Mark Dunsford of NOW Financial Planning told ifa he supports the leadership of Phillip Kewin and that the former Zurich executive is the right person for the job, but added his voice to calls for greater remuneration disclosure.
“It is important in the current regime of disclosure, that all CEO’s and Directors salaries, are clearly noted,” Mr Dunsford said. “With advisers having to bare their souls on disclosure, it is common sense that the industry body does the same.”
ifa also spoke with numerous AFA members yesterday off the record, all of whom indicated support for public disclosure of executive remuneration.
Mr Kewin said that were the association’s board to alter its position of individual salary disclosure, the information would likely be released in the form of an annual report to members, rather than statement to the press.
An ifa editorial published today argues that disclosure of individual remuneration details is an appropriate course of action for any association seeking professional status with FASEA.
Any adviser that sits on the AFA/FPA board (perhaps even at chapter level) could potentially have breached ASIC’s conflicted remuneration policy. If the FPA is getting $50,000 a year from Colonial, ING, AMP, Magellan let’s say and you’re a financial planner either working with the FPA directly involved and you’re using a managed fund or wrap account product, than it’s a clear conflict of interest and should rightly so be disclosed on your conflicted remuneration register and FSG. You’re out there getting a salary as a Director from the FPA and cash via the professional partner program and then you’re recommending clients use similar products how it that ethical and secondly not a conflict???
The establishment of the Financial Advisers Consultative Committee (FACC) this year by ASIC is a means for ASIC and Government to liaise with the advice community. To me it’s a clear signal that ASIC understands that the FPA and AFA representation is conflicted. Should these guys now be paid as much, or receive a bonus when ASIC has come out and bi-passed the associations with the establishment of FACC ? Clearly ASIC and the Government understand that the FPA is in the pocket of the big banks & I wonder how long it will be before members wake up and demand change.
We all know that neither the AFA or FPA put up any fight with regard to the LIF. What’s obvious is that both of these “organisations” have conflicting remuneration. They are heavily funded by the insto’s and their payback was compulsory membership mostly again provided by and funded by the insto’s.
It’s time for full disclosure and not just salaries. What are the bonus criteria’s, what percentage of member fees come from the into’s, what is the additional funding.
Until this gets out in the open and dealt with the FPA and AFA are simply paid for entities by the same organisations looking to destroy independent advisers and and a waste of time and money.
Independent advisers and clients have been completely let down by the AFA and FPA yet they want us to be forced to remain as members.
…..independent advisers let down by the AFA and FPA …. my dear God. that is a gargantuan understatement. they have succeeded in legislating IFA’s out of existence. look and learn people that is how the big boys do it. legally write you out of existence.
If we are going to have full disclosure of CEOs packages, then lets get to the smelly matter of the “Partners” buying influence on any professional body out in the fresh air and sunlight.
There is a suspicion that one particular vertically integrated product manufacturer with a number of AFSLs may have done a deal to “bring ” its advisers in as new members with at least two professional bodies.. Those newbies get a 10% discount, while lifetime members get no discount. Its not clear whether that manufacturer concerned funded the ( subsidy ) discount internally or an actual discount was on offer as a special case from the professional bodies.
Members in those circumstances have a reasonable basis to demand answers. More importantly they might like to know if staff or management of the professional body received any bonus for just doing their job – recruiting advisers as members, and if the CEO benefited, will that bonus be disclosed when the base package is disclosed. We do not want another Alex Malley type disclosure.
And then there is the final question. Did the product manufacturers succeed in buying even more influence over policy issues than they already hold though “sponsorship”.
Otherwise the professional bodies will wear the same flak that TWU super wore in WA at the Haydon Royal Commission, where union organizers were found to have been paid $75k pa to stop TWU Super members who sought to go to retail super funds
WE live in interesting times !
Here Here. As a full fee paying member of the FPA (not subsidized by AMP or CBA) I wonder how Opt in LIF & FOFA, would of actually turned out had his wage been paid by members and not by product manufacturers. Clearly they are nothing more than the voice of their puppet members and membership of these organizations are clearly heading towards 100% banks and large insto’s.
completely true FPA and AFA represent the interest of the major institutions
I agree with you. I tackled the FPA on this matter recently because advisers using BT and other large providers are given a 10% discount on their annual FPA fee renewals. While other members and especially those self-licensed pay the full amount it appears that the FPA is satisfied for us to subsidise the big end of town. After all membership renewals are all processed online with no work required by the FPA.
As expected I receive a nonsense reply from FPA.
hey PT i did the same and felt the same way. Was offered a 10% discount but paid full freight. Also got the same nonsense reply from the guy, who had a vested interest in it’s continuation. i.e it keeps members fees down. Yet we’ve got staff being paid just to manage this conflicted program. What a joke. I will soon be writing to the FPA requesting membership details and calling for the removal of the Professional Partner Program. I suggest all members of the FPA send an email asking 1) how come they can get a high 5 figure sum and yet we call this conflicted remuneration and how has it impacted on our representation and 2) what’s the impact on the membership base and policy direction of having a whole lot of AMP and bank advisers because they got a discount. We can’t have a CEO getting paid from the bank and then going to Labor or any government asking for opt in to be removed, it just ain’t going to work.
This is a complete beat up. I don’t see how knowing the salaries is going to help anyone. The Annual Report is pretty clear. Let’s focus on some real issues…
the real issue is how that salary gets paid…the amount is irrelevant to a degree. And at the moment it’s being paid by product manufacturers. This relationship, via the professional partner program is not even disclosed as they are ashamed of it. Why does the head of body of the AIOFP get paid $160K and an organization that accepts payment from banks get over $300K. What then is the impact on their negotiating position? It’s conflicted, it’s wrong and out of step with it’s members.
you nailed it.
The Full remuneration, not just the salary of the CEO (and previous CEOs), ought to be disclosed.
If a CEO received non-salary moneys from any source other than their salary this may be telling.
eg If a CEO received moneys as a result of increasing membership as a result of a dealership compelling its members to join a Professional Association it would be difficult for that CEO to be completely uncompromised when negotiating something like the LIF.
As a paid-up AFA member I regard the AFA as my servant. Not the other way around.
Failure to respond to a request for transparency suggests that the AFA holds itself aloof and does not regard itself as answerable to its shareholders. Without its shareholders it wouldn’t exist.