In its preliminary report into governance, remuneration and other issues at CPA Australia, the independent panel led by former auditor-general and CPA member Ian McPhee found a number of concerns with the accounting association’s push into financial advice licensing.
“The business case for establishing CPA Advice articulates a strategic rationale … there was significant intent from CPA Australia and the CPA board to provide a service that was in the best interest of CPA Australia, CPA members and the public,” the report, which was released today, stated.
“However, the performance of CPA Advice has suffered from a number of issues that have impacted uptake by members. CPA Advice has found it difficult to recruit authorised representatives, despite an initial high number of expressions of interest.”
In addition to a low take-up rate, the report confirmed “sizable losses”, with revenue falling well behind projections in the business case made by the management led by ousted chief executive Alex Malley.
The report also found that executive team remuneration at the association, including in the advice arm, was well above the “benchmark” for member-based associations and did not follow appropriate procedures.
The independent panel found a number of key reasons for the poor performance of the advice arm.
First, the report found that CPA Australia struggled to provide a “clear value proposition” to members in terms of becoming licensed by CPA Australia Advice.
Second, it suggested that “negative press” coverage of the association and its leadership team may have adversely impacted the recruitment drive.
Third, it acknowledged there were serious member concerns around a potential “conflict of interest” in the launch of the advice business and possible inability for the association to meet its requirements as a “professional occupation association”.
The preliminary report recommends that the association conduct a “comprehensive post-implementation review of CPA Advice” and “reconsider the strategy” in light of the poor performance so far.
It noted that changes to the pricing model for CPA Australia Advice have already been announced.
Hahahahaa! LOL, I just noticed the thumbs up and down on the comments and mine aren’t fairing that well it appears! Looks like the CPA’s are out in full force on this page! 🙂 All good!
Comment above is from me, Squeaky_1 – I have no idea why it was labelled ‘Anonymous’ . . .
Would have thought it went without saying that “I don’t speak for you”! That is self-evident. Sorry if my comments were a bit close to the bone for you. I thought we were amongst friends here and we could speak openly, especially since many of us are anonymous. Not trying to trigger anyone here, only the pollies, life company execs and the readers from the special interest groups. Sorry if you felt offended.
And do not forget Mr Medcraft of ASIC publicly endorsed this particular model AFSL by accepting n invitation to the ribbon-cutting ceremony and then refusing to admit there might be a conflict when appearing before the PJC. Total lack of judgment. And he judges OUR performance !
Should have partnered with a reputable existing AFSL
Which one???
Revise the strategy ? The ship has already sunk. Surely the CPAs of all people should understand that this business venture is no longer a going concern.
Well, this is a surprise . . . NOT! I wonder what made a bunch of academic numbers-men think they could be successful at sophisticated consultative selling? If the context of ‘advice’ here is including life insurance then we all know that has to be ‘sold’ (for lack of a better word). Selling is not the forte of your basic accountant – even a hoyty-toyty CPA! Incidentally, I’d like to see people define ‘advice’ when they use the term loosely in conversation and articles. There is full financial planning ‘advice’ and then there is ‘risk advice’. SO important to say which one you are talking about but rarely people do. Again, two different disciplines for two different advising styles. This is why I am always going on about a separate licence for riskies. Old mates at the life companies elite exec levels know what I mean but you’d never hear from them on this with all the changes going on in THEIR industry. Where are their voices in the debate – where are the results from them? Just crickets . . .
Squeaky_1 you make some valid points, but then you lost me with “a bunch of academic numbers-men” and “hoity-toity CPA”. Not very ‘sophisticated’ (sorry, your word not mine). While I respect your right to have an opinion, you certainly don’t speak for me, so please stop driving a wedge between Accountants and Financial Advisers – there’s room for both.