Hamish Ferguson, a director of Newcastle mortgage broking and financial planning firm Vision Property and Finance, told ifa that industry bodies were advocating change “the wrong way” as the onslaught of legislative responses to the royal commission affecting advisers kept coming.
“I find it very frustrating seeing the industry so fragmented and believe most industry players are going about this all the wrong way,” Mr Ferguson said.
“We need to learn from the mortgage broking industry [and] how well they defended their turf after the royal commission, and come up with a single message that the whole industry can get behind. The politicians say our message is confusing, and the public don’t really hear from us at all except bad news.”
The comments echoed remarks from financial services minister Jane Hume late last year, who said that while unity in the industry’s lobbying efforts had improved, “trying to get everyone on the same page has been quite difficult”.
Mr Ferguson said he had liaised with his industry association, the AFA, to get more collaboration going between adviser bodies and ensure politicians understood the issues at stake for advisers.
“Whilst I am hearing that [the AFA] agree, there seems to be a lot of excuses being given as to why it can’t be done,” he said.
“If either the AFA or FPA came out with a single call to action that the advisers could get behind this would be great. If that same message was broad enough to allow the insurance companies and super/platforms to also get involved, then it would be even better.”
AFA acting chief executive Phil Anderson said the association had “from time to time” received member feedback that collaboration between the industry bodies could be better.
“We would say we’re already doing a lot of it – the AFA and FPA have a joint task force on life insurance and we meet on a monthly basis and we’ve been doing that for about two years,” Mr Anderson said.
“The FPA and AFA have also been working with insurers as part of the Choice and Access to Life Insurance campaign and the FSC has been part of that, and through that we have had a number of meetings with politicians including going to Canberra.”
Mr Anderson said feedback from parliamentarians had also indicated that a more “consistent message” would better serve the advice community in its interactions with the government.
“They do like to get a consistent message, that point has been made with us a number of times,” he said.
“I think they are supportive of where we can give a clear and consistent message about what needs to happen.”
AIOFP executive director Peter Johnston said he believed a number of factors had prevented better collaboration between the associations in recent years, including the influence of product providers and the large number of competing industry bodies in the sector.
“The likelihood of most industry associations collaborating with lobbying activities is low until some critical issues are addressed,” he said.
“The first issue is separating advice from product provider influence. The second is association management being transparent with members about whose actual interests they will support, and the third is a crowded marketplace of associations trying to be relevant to a diminishing market.”
Mr Johnston said with 14 different associations competing for membership from a dwindling pool of less than 20,000 remaining advisers, it was natural that they did not want to be seen as similar to others in the market.
“The final issue that needs to be addressed is educating the politicians on why some associations do not collaborate, and it all relates back to all the other issues,” he said.
Different member demographics were also interested in prioritising separate issues, with Mr Johnston saying AIOFP members had provided “overwhelming support” for the association’s marginal seat campaign.
“We have invited other associations to join our approach but it’s too aggressive for them, which is understandable,” Mr Johnston said.
Mr Anderson added that it was important to try and find common ground despite the fact that industry bodies “don’t always agree on every issue”.
“You need to be willing to compromise on things that may not be high priority to you and may be for other associations,” Mr Johnston said.
The various “Associations” – purportedly representing Advisers’ – have been “captured” by the other players in the sector – namely Institutions, large dealer groups etc. This is where their funding comes from (in large part) and these players have effectively “gamed” the system for years.
If you expect these Associations to effectively represent Advisers – you will be waiting a long time.
For all the why don’t advisers stop complaining and take up the mantle comments. Advisers are flat out trying to just survive at the moment. The associations are PAID to represent the advisers. Its their job and again its what they are PAID to do. the CEOs have sat on enormous salaries relying on compulsory membership whilst Rome burns around them
Love the debate. As Gavin imply’s though, we need to get involved and fight for our industry. Not sit on the sideline. Call your association. Tell them what you want
I did..in the case of the FPA I .told them they should rock proof their house due to a pending royal commission and place the needs of Advisers regardless of who they work for first, that we have one chance, just one chance at self regulation and they told me they have obligations to represent large product manufacturers, large Super funds etc etc, also and if you don’t like that than leave..so I’ll save you some time…. take up their advice and leave.
Why wouldn’t they know!!! The suggestion they need to be called by their members at a time like this and given direction show how totally useless they are!!!!! What a ridiculous statement!
The problem is that the associations are conflicted and do not know how to play the game. Until recently the AFA did not even contract a political lobbyist. Truth is that this is all about politics, not education nor ethics. The associations are omnipotent and we see the results of that- Nil.
If only Advisers spent as much time providing feedback directly to the Politicians as they do whinging about the Associations on these forums…
Get off your backsides and provide the feedback to your local member yourselves. The Associations are there to support you in this role, not do it all for you.
So who do the associations represent then, if they don’t represent Advisers or the Industry?
They don’t solely represent you, the mandate of the FPA is to represent the industry which includes Platforms, Product manufacturers, Superfunds and Licensee’s and of course advisers. A lot of bodies to keep happy and it’s best to say and do nothing and collect $1,000 a year and hand out CFP logo’s and make some money on the side from a conference. That’s why they’ve got $12 million in cash doing zip.
I never said they don’t represent Advisers. I said they aren’t there to do it all for you.
Associations are better at dealing directly with the Cabinet Ministers whereas as Advisers, as constituents of the Federal Members, are better at lobbying the backbenchers. The Minister can choose to overlook the opinion of one or two Associations, but it’s much harder to overlook a line of backbenchers queuing at their door to pass along our concerns.
This. This is it.
i actually did see a local MP who is also a party whip for government, he believed that all this ruckus was good for the industry….and did not listen ……that was 18 months ago…seen him recently and he admitted they got it wrong. …he did not follow up on the association advice….but rather party politics.
Gavin, I have been involved with the Politicians as a broker and adviser, the broker industry was united, as advisers we are not. We are not going to be heard unless we have a message that all can band together with. I am not saying that the associations are not trying. What I am saying though is that they are not united
OK Gavin. Have sat face-to-face with 6 local Senators, covering all persuasions, discussed the various reasons for the gradual decimation of our industry with a result = 0! How many have you seen over the journey?
Not expecting the Associations to do it all…..something would be good!!
KC, full credit to you for taking action but you’re still only one voice. Just imagine how effective this approach would be if 10% of Advisers did the same as you. That would be over 12,000 meetings taking place to discuss our challenges. No Association can provide that sort of manpower.
And yes, I’ve had several meetings with the Federal Members in my region over the last few years.
Perhaps you should be asking why your Association is not having any luck. One Treasury official has told me “the FPA represents AMP and the like” ..Imagine what would happen if just 10% of Advisers went to these bodies and told them to represent Advisers. Not the licensee, not the Platform but stand up for Advisers. Surely a body that represented the needs of Australians and all Advisers would have better luck.
As a combined mortgage broker & financial adviser myself, I have been quite pleased with my mortgage association’s lobbying efforts and coordination with others. However there are good reasons why that is much harder to achieve in financial advice.
The products and services covered by financial advice are much more diverse compared to the focused nature of mortgage broking. Hence we have different advice associations with primary alignment to insurance, investment advice, stockbroking, and SMSF.
Mortgage brokers are also in the fortunate position of being able to easily demonstrate value added to the consumer, without any additional cost to the consumer. This is because mortgage brokers don’t charge fees, and their commissions are built into the product cost. That product cost is generally the same regardless of whether the consumer goes via a broker or direct to a lender.
Hopefully after FASEA thins out the numbers and forces everyone onto the same generalised base level of knowledge and skills, there will be a rationalisation of advice associations and a more consistent message. But it’s not realistic at this stage to expect the same level of lobbying unity and success as occurs in mortgage broking.
Umm..I think you’ll find it’s as simple as the Mortgage Brokers Association represents “Mortgage Brokers” whilst the FPA represents the entire industry including the licensee, product manufactures, insurance companies, and advisers. The FPA does not represent Financial Planners it represents the Financial Planning industry. You can see the Mortgage Brokers Association got things done. Imagine if they were representing the Lending industry, they’d be like the FPA pretty useless trying to be all things to everyone..unwilling to upset anyone.
I think what you have said is correct, and you have articulated it very well. However, I also think it has to be said that the FPA and to a lesser degree AFA really let planners down at the Royal Commission. I was appalled to watch it all unfold and subsequently cancelled my memberships in disgust. If the FPA and AFA had been more worried about the actions of planners, and less so on ensuring their qualifications were ‘FASEA Approved’ and everyone was paying their membership fees they would have more of a voice with government now. Ultimately it is this behaviour that lost us our seat at the table.
Excellent comment.
Yes it is easier for Mortgage brokers to demonstrate value. Especially when it is a free service mostly. That doesn’t mean that we just roll over and declare defeat. We just need to be a bit more creative and smart in how we move forward
There is diversity in the planners and diversity in the associations. Therein lies the problem.
I think that’s been a cop out…. Yes the needs of AMP Planners are quite different to AMP itself…but I don’t think the Advice needs of someone going to AMP or yourself are that different. Surely we could have just one body that represents Planners and Australians and will say those large licensee’s, Platforms are big enough to look after themselves and stand up and defend for example CBA advisers or AMP Advisers. Why would any planner be happy for it’s Association to have a conflict or multiple competing interests as to whom they represent. The only way we can reduce red tape, drive down costs, is to have real leadership and to get conflict free representation.
A marriage fails if two people can’t compromise and work together. We will fail as well if we can’t work together. Every problem has a solution. Are we solution providers or not? We have to help ourselves
Hamish is correct – there needs to be better coordination between the associations. But that coordination was always tenuous when the product manufacturers supported at least two of the associations and thus were able to swing the lead on the public stands of this associations when dealing with government.
As to the mortgage brokers, well they spent money on TV advertising campaign which was effective and targeted at politicians. Sadly the AFA/FPA chose not to utilise media over and above their negotiations directly with the politicians. But I always have had a sneaking suspicion that, in the post Hayne hysteria, the mortgage brokers had the backing of the banks behind the scenes. I suspect the banks suddenly realised that mortgage brokers without commissions would result in the banks losing market share (which would normally come to them via the brokers, some of whom they owned or controlled) with customers having a bank hatred going to smaller players in the market and indeed encourage more smaller players in the market.
So the banks acted in self interest, as usual, and suggested to the government that banning commissions to brokers on mortgages might just not be a smart move. It was good politics to because it allowed the mortgage brokers Association is to claim a victory for their members. But I suspect that in return there will be a heavier compliance loaded enclosed imposed on the mortgage broking industry in the near future as a quid pro quo. Standby to repel boarders!
Divided we fall, united we stand !!! This is typical of this industry these days. We need one strong body to represent us not 2-3 .
Perhaps that one body should be AOIFP with Peter Johnstone at its head. Can non self- licensed advisers become members of the AOIFP
Oh dear, what an idea.
We need financial advisers to realize the existing bodies don’t solely represent advisers and have competing interests. Dear FPA members good luck trying to be heard against AwareSuper when they give a cheque for $100K plus a list of members. Perhaps it’s up to members to have a rethink how they themselves are contributing to an environment where nothing is achieved because they belong to a body that wants to represent everyone and every party in the industry. I say you can’t achieve that.
the fact we have two industry bodies competing for membership $$ is a joke in itself. Time to get rid of them both they proved their worth and it’s a big $0!!!!! Both bodies were stroking the Government as they were each competing for the spot of industry body, now that has been handed to ASIC they all of a sudden change their tune. Too late you have let us all down and it’s time to go.
No real difference to mortgage brokers though. There is the MFAA and FBAA
Treat the association you are with in the same way as an FDS. If not satisfied with the amount or level of service you paid for, ask a refund and look at an appropriate alternate association. Whilst there are differing ideals being put up by individual associations there will be unworkable dissent and all planners will be fodder. It’s a lot like animal farm at present, one association in particular thinks it is superior at planners expense and won’t be getting my $$$s by EOF. Time for all planners to up the ante personally.
I am still at a loss as to what value the adviser associations provide us advisers. They are reactive, play the blame game, and have done nothing for me as an adviser. I dont feel they represent me nor the majority of the advisers out there. The adviser associations seem too preoccupied with getting members to line their pockets as opposed to advocating for the positives that advice and advisers provide.
provide jobs for themselves.
yes you’re correct Dean…they don’t represent you..they represent multiple parties in the industry…and advisers needs don’t always rank highly enough. secondly they have there own agenda too… glad to see you’re waking up….
Mortgage broking industry…. THE biggest financial product in terms of impact to one’s well-being is a mortgage.
Brokers can still get paid more, from encouraging customers to borrow more or use a particular product over another.
Australian regulation is politically driven, not customer driven.
No they can’t. Mortgage brokers are now subject to a Best Interest Duty to prevent this.
[b]The AFA and FPA do not represent Advisers. [/b][u][/u]They represent the industry and face competing interests. Yet many advisers want them to Advocate for Advisers…Unfortunately the needs of large institutions or the licensee can outweigh the needs of Advisers and can conflict. You see this everytime a large firm blames it’s on advisers and we ended up with FASEA. Now, AwareSuper a substantial contributor to the FPA, now wants low touch, phone based advice whilst many many advisers want personalized high touch advice processes… Perhaps Advisers need to ask themselves why would you renew your membership if you’re belonging to body that is trying to be all things to all parties.
Peter Johnstone’s 3 comments are totally spot on.- perhaps the best summary I have ever heard.
Totally agree with Hamish Ferguson – the mortgage industry were swift and focussed in their response which was so strong that they even got Bill Shorten to change his stance – right before the election.
Phil Anderson is one of the most incompetent professional I have met in the industry – 5 years ago he came to out national conference and whinged and whined about how difficult it was for him to convince regulators to tone down the education requirements – now he has become Acting CEO- we financial advisers should not get our hopes up that anything will change with his weal-kneed, mediocre representation.
“Mr Anderson added that it was important to try and find common ground despite the fact that industry bodies “don’t always agree on every issue”.
Well Mr Anderson it is not about the associations/industry bodies…..how can these groups not agree on every issue, when their members do. It’s a swag of “common issues” that is decimating our industry that all advisers can see but obviously the AFA and FPA can’t…..smells of “self survival” to me, which in itself is continuing to the decimation.
I’ll call “fees for no service” on this one!!
I agree this has been the major downfall of the financial planning industry. Not having one industry body to put a united case for all Financial advisers who are doing the right thing, but continually have legislative red tape added to the industry. The new FDS and Opt-In rules would be enough of a change but combine that with the platforms needing their own fee consent forms and you have a huge increase in administrative requirements. This has created a totally unworkable and inefficient system and clients will end up paying for it, or not being able to afford advice.
100% agree.
Well said Hamish ?
I joined the AIOFP 5 years ago as they were more dialled into the ongoing issues on the front lines as opposed to the AFA and FPA. The AFA under Phil appears to be making some good noises.
I think many have been unfair on the FPA and the AFA and have had false expectations. The AIOFP represent advisers and hence most Advisers are fans. The FPA/AFA represents, as an example AMP Pty Ltd, AMP the licensee, AMP the fund manager, and in that mix AMP advisers. Worked well up until 2008. The needs or wants of the Adviser can differ at times from each of those parties and so Advisers should therefore expect there needs to fall behind those other parties at times.
Agreed. AIOFP is ahead 9f the pack, but AFA are improving. FPA is mouse like in their criticisms of this government; not sure why anyone would fund them with membership fees.
The AIOFP is partly very good, partly unintelligent bomb thrower.
advisers are politically soft targets – they have been set up that way with a dirty narrative for years. The curious thing is why there continues to be a carve out for industry super funds –
apart from the Political donations is that the main bodies also need to represent these Super funds. Take for example AwareSuper, a major member of the FPA’s Professional Partner Program now replacing advisors with call centres and calling for said carve outs…Let’s be fair, the FPA has to balance their needs with yours (which are very different) and try keep all parties happy. Tough ask.