MM Leader: Don't let the regulator split advice sector
The state of Aifa’s finances, revealed earlier this week on the Money Marketing website, clearly highlights the predicament facing director general Stephen Gay.
The trade body’s results for the year ended June 2011 show a deficit of nearly £200,000, compared with a small surplus the previous year.
Gay has made no secret of the financial pressures Aifa is facing as it looks to fund a representative body able to operate at a national, European and sometimes international level. The trade body is currently funded by annual membership subscriptions along-side sizeable provider contributions.
Members who are part of a network pay a disproportionately low subscription compared with directly authorised advisers and a restructure of this charging model could be one way of increasing income. This may be unpopular with network chiefs on Aifa’s board who believe they already contribute significant sums.
However, you get the trade body you are willing to pay for and with more and more policy decisions being made at a European, rather than national, level, advisers need as powerful and as well funded a voice as possible to represent their interests.
With all this in mind, now the worst possible time to contemplate a split in adviser representation.
In last week’s Money Marketing, IFA Centre managing director Gill Cardy and Aifa council member Neil Liversidge both provided powerful and contrasting arguments. Reading both, it is clear how the FSA’s new definition of independence threatens to create an artificial and unhelpful boundary that splits the professional advice community. This false split must be resisted.
The value the public places in independent advice is that the IFA is the agent of the client, independent in their product selection with no provider influence clouding recommendations. 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 does not mean they do not share the same values of the new independent sector.
As Aifa’s latest financial results show, the IFA community cannot afford to let a meddling regulator divide it.
Professional independent (with a large and small i) advisers need a single powerful voice to be heard alongside well funded insurers and banks who will often have opposing interests. Perhaps Cardy’s talents could find a place within a restructured Aifa?