An industry association is urging financial advisers to join the Financial Sector Union in an effort to gain greater influence of government policy amid political turmoil in Canberra.
In a document sent to members titled ‘Advice – A New Direction’, the AIOFP’s executive director Peter Johnston outlines a new political strategy that he believes will assist the commercial and political direction of Australia’s financial advice community.
“The past political representation has simply not worked,” Mr Johnston told ifa.
“The current stage of the political cycle strongly suggests now is an opportune time to seek and institute change.”
The AIOFP is urging its members to join the left-wing Financial Sector Union (FSU) in an effort to gain leverage should a labour government win the next federal election.
The radical move comes after former Prime Minister Malcolm Turnbull was outed in a leadership spill that also saw a significant reshuffling of cabinet ministers and the appointment of former Treasurer Scott Morrison as PM.
However, the AIOFP’s Peter Johnston believes political preferences should be cast aside and is urging advisers to consider a strategy that will safeguard the industry amid growing concerns around what many see as burdensome educational requirements and onerous compliance regimes.
“What has become painfully clear is that our traditional path of relying upon institutionally aligned associations to act in our best interests has not worked,” Mr Johnston said.
“FOFA, LIF and now FASEA have resulted in an overall poor outcome for advisers, been generally favourable for the institutions and all were negotiated by the institutionally aligned FSC, FPA and AFA associations,” he said.
“Advisers need to start dealing directly with the major political parties, known colloquially as being ‘in the tent’. The advisers have never formerly been in the tent on either side of politics, we have just hoped our past representatives will act in our best interests, a big mistake that will now be corrected.”
The AIOFP executive director said current polls suggest a Shorten government will win the next federal election and that history indicates they will be in power for two terms, or six years.
“This means we need a clear plan to identify those who can influence and determine policy with the caucus, simply criticising policy without a means of influencing is not a sustainable option,” he said.
“Even if a Morrison government does succeed with maintaining power we need to diversify our political capital with both sides of politics going forward to have a serious say in our own futures by using political leverage when required.
“We are hopeful that the new Morrison government will agree to modify some aspects of the FASEA’s proposals, however the harsh political reality is that the Morrison government may not be in power in the near future and we will be dealing with a Shorten government.”
Many advisers have not forgotten Bill Shorten was the chief architect of the FOFA reforms. He recently backed the FASEA legislation.
Nevertheless, Mr Johnston said that “it has been a mistake to alienate the ALP”.
“We encourage our members and all advisers join the powerful left-wing white - collar Financial Sector Union to have a say in ALP policy development and protect our position,” he said.
“FSU members are the employees of the Banking and Insurance sector, they do not have an adviser component but want one. Please also note that the FSU has a membership that is not considered militant and largely seeks to influence policy and debate both privately and through the media when required. The FSU rules are the most appropriate for advisers to join.
“The FSU has agreed to consider appropriate representation of advisers on their national executive.
“We will be fundamentally influencing the adviser policy direction within government, surely a better position than relying upon the institutions to protect us?”
Meanwhile the AIOFP announced told members on Friday that it will join the Small Business Association of Australia (SBAA) in the political lobbying category, where it will be part of a national approach to protecting small business against large business manipulations.
“Considering our battle against the institutions and their aligned associations is essentially small business v big business, being involved with a powerful national lobbyist makes strategic political sense,” Mr Johnston said.
“For too long advisers have put their blind faith into the FSC/FPA to represent them in Canberra, it has failed miserably due to their support of the institutions. The institutions have cleverly ‘divided and ruled’ us over the decades and it is time this finished.
“FASEA has galvanised the advice community like no other event in history, it has demonstrated that regardless of an adviser's licensing characteristic we need to unite under one entity when dealing with Canberra.”
Several firms have been impacted by the corporate regulator’s action.
Super funds must now have a retirement income strategy in place.
Vanguard has called for a complete overhaul of the advice industry.
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