A couple of weeks ago, just before the new year, one of my regular correspondents sent me an email. This person is an IFA and has been round the block a few times.
We do not agree on many things. Indeed, we tend to find common cause on very little. But his semi-regular caustic take on the industry is always a pleasant distraction from the pressures of a deadline.
Anyway, just before Christmas, this guy emailed me to comment on Aifa’s announcement that it is to hold a root and branch review into the way it operates, consulting with members about its purpose as well as the scope of its membership.
By his own account, my correspondent experienced several such reviews in the 1980s and 1990s when he worked for several life companies before becoming an IFA. His experience made him extremely cynical of the processes involved.
“What a load of old bol*ocks,” he wrote. “Reviews like this are always a waste of time. Their only purpose is to provide the cover needed to take the organisation in the way you want it to be changed in the first place.”
It is hard to disagree with him. For example, if it is the case that Aifa will consult with its membership over allowing restricted advisers to remain within the trade body, then the outcome is unlikely to be in great doubt.
After all, Aifa’s Advice Horizons paper last year indicated in a not too subtle way that while genuine independence remained “the gold standard” for IFAs, restricted advice was the next best thing for addicts unprepared or unwilling to give up their commission-based remuneration. It is almost certain that, faced with the possibility of retaining its ideological purity but losing up to 25 per cent of its members who opt for restricted advice, many senior figures in Aifa will prefer the softer alternative.
In many ways, however, the issue is less that of who belongs to Aifa and much more one of what Aifa is for.
The evidence suggests increasing numbers of its members do not know. In my last column last year, I suggested that in the previous 12 months, we had gradually seen the development of an online claque of IFAs, unremittingly resistant to almost any change within the industry and desperate to cling on to past ways of doing business.
This group has, to a large extent, succeeded in framing the debate in its own image. Its voices are the only ones heard and the stridency and unremitting hostility to an A-level-grade qualification for advisers is something to behold.
Even more staggering is its demand for an extension of the deadline by which this qualification requirement must be met. These people have already wasted more than two years since the FSA’s plans were first mooted. Now they tell us that the two years they have left do not give them enough time to pass the exams they knew were always likely to be a new professional requirement. They have repeatedly abused Aifa for perceived failures in defen-ding “their” interests – which they perceive as synonymous with those of all IFAs.
Yet what is even more striking about this online debate is the near complete absence of anyone willing to stand up in favour of Aifa. It is almost as if the trade body’s rank and file are no longer confident in the ideas of the organisation they belong to, to the point where they are unable to defend what Aifa stands for.
All this has profound implications for Aifa, the most important of which is that unless you are prepared to have a vigorous internal and external debate, you will be marginalised. That is increas-ingly what is happening.
But just as it is necessary to have that debate, it is also vital to put forward a clear and unambiguous message.
For example, to simul-taneously call for “greater flexibility” over the intro-duction of the RDR while confessing that you are unlikely to be able to significantly affect the FSA’s deadline earns you no respect from either side. You also have to have some understanding of tactics and of picking the “right” fights, even in cases where the prospect of victory is not certain.
Last summer, Aifa had a choice as to whether it would back legal challenges to the Financial Services Compensation Scheme over its £80m levy in respect of Keydata and other collapsed firms labelled as “intermediaries”. It chose not to, arguing that it had obtained legal advice suggesting that it stood no chance of winning.
This was an issue that needed to be fought to the hilt, even at the risk of losing. Leaving Regulatory Legal to represent IFAs in this battle was a bad tactical mistake.
For Aifa’s review to bear fruit, it will be necessary to be far more daring than it has ever been. On past evidence, I do not see that happening.
Nic Cicutti can be contacted at firstname.lastname@example.org