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Aifa needs a new 'excited' leader

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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

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Readers' comments (10)

  • Whoever the new chairman of AIFA, they will need to have a clear vision of what is the role of an IFA in the future, I'm one of those individuals who is in my mid-40s and wanting to remain within the industry but have fed up of having so much negativity while there's not much talk about what the future holds.

    We live in a world where there are always going to be regulation what we need to is really sell to the general public the benefits of independent financial advice and not free advice as a stupid money advice service adverts claim is available.

    We all work extremely hard to earn a living in this industry and the person to take on this role needs to educate not only the general public but also politicians and regulators of the benefits of independent financial advice, and the value that this profession brings to society after all who is going to educate the general public on saving or their protection needs. These things do not sell themselves even if the regulator thinks they do

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  • The Retail Destruction Review is the enemy, not AIFA.

    The PFS persuaded someone called DK that it was a good idea and NM advisers like GC (no lonager an IFA) agreed, until reality smacked them in the face, like a wet kipper.

    I'm so glad I'm not an IFA but I still believe with a passion that independent is the only distribution model consumers can depend upon. Apart from the Muppets we all know exist at every level.

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  • Stating the "John Cleese" obvious Paul!

    Compared with BIBA, AIFA has very little gravitas and they certainly aren't having my money till they show some backbone, which probably means they never will have my money.

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  • Not nice comments. I am usually critical of Aifa and their lack of support of the IFA, however.... Under Stephen Gay, AFIA did in latter months seem to be more vocal for the IFA and more vocal in pointing out the FSA shortcomings. Comments like above will not make him think kindly of IFAs, especially if he thinks he did try to move the organisation forward from being a head nodder to a fighting force. Good luck and remember the plight of the IFA Stephen - don't sell out!

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  • AIFA needs an IFA to head it up. I will do it for free. Will AIFA take me on?

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  • This orngaisation must have a working IFA as leader to represent IFAs........period

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  • The new 'excited' leader could start with reformating the organisation to cater for 'Intermediaries', not simply IFAs - as this is vastly more reflective of the future, than any current thinking.

    The reason that AIFA does not have the same gravitas as BIBA lies in part that the 'independent' nature of its constituency has made it hard to develop a coherent agenda - everyone here seems to think AIFA should be their personal platform or army, and it isn't.

    You won't get a "narrative that connects" whilst asking AIFA to bridge that gap - they swing one way or the other, and you'll find someone willing to decry them. If you want to ask why IFAs do not have stronger representation, start at home.

    That and I don't think Gay inherited it in any health, at all. Whilst there's clearly no consensus from the members, I suspect there's also ridiculously little funding behind it - and you get what you pay for, in the end.

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  • "This orngaisation must have a working IFA as leader to represent IFAs........period"

    And this is when it becomes apparent that some people don't know how this organisation works, or should work.

    A working IFA? Who would manage to be non-partisan, despite a vested interest in their own business? Who would, somehow, still manage to run that business and maintain a full-time commitment to AIFA?

    Haha, never going to happen - and, if it did, you'd still find reason to complain, the moment they made a decision which didn't swing your way.

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  • We need a new definition of independent financial adviser- one who acts first and foremost for the client's best interests.

    Independent should mean independent of external commercial or compliance pressures to act other than in our clients' best interests -whether that is from your shareholder, bank manager, sales director or a misguided regulator who still seems to think its all about products and their "distribution".

    The new IFA is willing to confront the client with the true cost of advice and has the confidence in their own value proposition that to justify their fee.

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  • Paul McMillan’s piece was an excellent appraisal of the situation.

    However the problem that’ dare not speak its name’ really needs to be aired. This is not meant to offend, but to be a cold and honest appraisal of the situation.

    Firstly it has to be recognised that trying to get consensus from the adviser community is akin to herding cats. I use the term adviser community rather than IFA because by numbers much of the constituency is made up of network members. Even then there are very different networks with very different ethos.

    At what I will term the’ lower end’ (which often coincides with the biggest networks) you have what can only be described as the dumbing down of standards. Often members have joined to ‘hide’. To hide from the direct glare of the regulator and involvement with regulation, to hide from the technicalities, to hide from the research- even to hide from complaints. They prefer (again in the main) to be protected and cosseted. They are in essence just company men who think that they run an independent business. As company men they pay a not inconsiderable levy to their protector and thus feel disinclined to pay further charges to anybody which in their view provides very little in addition to their mentor and protector.

    Therein lies the problem.

    Will it change? Will networks change to become service providers if they feel that they will lose control of the cash flow and their main attraction – commissions, which they have bid up over the years to pay their way and to attract members?

    As far as AIFA or whatever it becomes, is concerned. There are three main points.

    You must have a representative body and although others make valiant efforts they will be but passing flights of fancy. AIFA has the infrastructure and thus far is still taken seriously by those who count.

    The idea of having an IFA or ex-IFA running the show is a guarantee of its speedy demise.

    Finally in the words of Joni Mitchell “You don’t know what you’ve got till it’s gone’.

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