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Aifa in fee hike warning as it proposes admitting multi-ties

Aifa has warned members unwilling to accept multi-tied members to be prepared to pay a 25-30 per cent hike in subscriptions to keep it afloat without them.

The trade body has launched a consultation paper seeking feedback from members to help determine its profile and size post-depolarisation.

Members have to decide whether they want a purely independent trade association under the strict definitions set by depolarisation, thereby rejecting all whole-of-market, multi-tied and hybrid firms with a combination of arms.

Alternatively, members can opt to accept multi-ties, whole-of-market advisers which do not charge fees or firms which offer both independent and whole-of-market services.

The possibility of expanding the Aifa membership to include multi-tied advisers met vocal resistance from some IFAs when initially raised by director general Chris Cummings last month.

But Cummings says maintaining membership exclusively for independent advisers would prompt a drop in membership, putting the trade body in a financially difficult position and lumbering remaining members with a 25 to 35 per cent subscription hike.

He says any reduction in membership could also reduce Aifa’s influence.

One Aifa proposal would see the trade body admit firms with an “independent core” but which may have a whole-of-market or multi-tied division. Aifa says this would build on its independent credentials while recognising changes in the market.

The consultation paper says: “This option enables us to continue to attract members but restrict our coverage to firms with independence at their heart.”

The results will be announced at the Aifa council in September or earlier if appropriate.

Plan Invest Group joint managing director Michael Owen, an Aifa member, says: “Multi-tieds have different problems to IFAs and I am worried our representation could be wat-ered down and there could be a divergence of interests. But if fees are going to go up, then commercially we would have to consider letting them in.”

Aifa membership options

  • Option 1: Maintain membership for purely independent IFAs
  • Option 2: Admit independent and whole-of-market firms (advisers which do not offer a fee option and cannot call themselves IFAs under depolarisation)
  • Option 3: Admit those with commitment to independent advice but with whole-of-market and/or multi-tied divisions
  • Option 4: Admit exclusively whole-of-market firms with no independent wing
  • Option 5: Admit firms with hybrid model or combination of divisions, for example, whole-of-market, multi-tied, independent, but no need for independent arm
  • Option 6: Admit firms with only a multi-tied offering
  • Option 7: Create different membership categories for firms which do not meet independent definition.
  • Option 8: Any other options recommended by members

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