I suppose you would hope the person in charge of the trade body representing IFAs through the most radical regulatory restructure in over 25 years would see the role as more “exciting” than being a director of the ABI (no offence ABI).
But whilst his leaving interview with Money Marketing earlier today told part of the story as to why he was jumping ship, Gay underplayed the stress and strain he has been under since taking on the Aifa role just over a year ago. He certainly did not seem like he was enjoying his tenure.
Aifa accounts published in November showed a deficit of nearly £200,000 despite a raft of measure implemented by Gay to cut costs. Although much of the noise around Aifa’s strategic review has been centred around the independence/restricted issue, the real arguments behind the scenes have been around funding and how to pay for a trade body representing professional advisers with the muscle to be taken seriously by regulators and politicians both in the UK and Europe.
With economic conditions continuing to squeeze firms large and small, the trade body has been finding it increasingly difficult to persuade people to pay a fee for something that they will get the benefit of anyway.
Product providers already provide a substantial investment into Aifa’s coffers each year. Negotiations to try and get the bigger networks to pay more than they currently do, on the basis that per member they pay much less than a DA firm, have apparently been proving difficult.
With his head stuck in the strategic review and various internal battles, Gay found it difficult to articulate a vision for the future of the profession and a narrative that really connected with members.
Speaking to many IFAs over the last few months, both members and non-members, chartered and Certified, the restricted/independent issue was not the big concern. A decent number of forward thinking adviser firms are considering the restricted route at present as they plan the best business model for their clients.
The value most consumers place in independent advice is that the IFA is the agent of the client, independent in their product selection with no provider influence clouding recommendations. This should be the case with restricted advisers as long as the FSA implements its rules properly. Just because an IFA decides they do not want to subject clients to the additional costs involved in the FSA’s new definition of independence, and may therefore look to offer a restricted service for some or all of their clients, does not mean they do not share the same values of the new independent sector.
There continues to be plenty of misinformation quoted in the media about the RDR- I read recently in a consumer title that restricted “sales” advisers will be able to continue to receive commission and would have lower qualification requirements.
Gill Cardy sets out in this week’s Money Marketing why she hopes the independent-only IFA Centre will be a success but I do not think the restricted move is the major reason why people are leaving or failing to engage with Aifa.
I’m not sure there will be a flood of applicants looking to grab Gay’s so-called poisoned chalice. Maybe current Aifa director Rob Sinclair? Perhaps former policy director Andrew Strange will be tempted to return?
Leading the representation of professional advisers should be a position people get excited about. Whoever does takes over will have to show quickly how passionate and “excited” they are about the role and need the full backing of a committed Aifa council if the trade body is to be taken seriously.
Paul McMillan is the editor of Money Marketing- follow him on twitter here