There is little point in a trade body that does not speak with one voice. The public slow puncturing of the Investment Association highlights how much of a one-trick-pony a trade body really is.
The peripheral services they provide – regulatory affairs, analysis of policy, PR and so on – are all duplicated by the internal functions of its members, who effectively pay for these services twice.
The IA’s former chief executive Daniel Godfrey may well have been right but his salary (over half a million pounds of it) was paid by people who largely disagreed with him. The recently announced FCA review into the fund management industry might be no coincidence of timing. The fund managers have, inadvertently, spoken as one.
The desire of a trade body to grow beyond its original purpose (lobbying on behalf of its members) and add some shared resources is admirable but also the source of its failure. No financial institution is brave or selfless enough to dismiss its own in-house expertise and rely on regulatory and PR expertise it shares with its competitors.
Apfa is staring down the barrel of a similar fate. In its earlier years it produced some decent policy analysis but I am not sure it has the same resources now. Its funding is dependent on big firms and providers that, again, have their own PR and policy resources.
It is trying to unite advisers behind a long-stop campaign that is largely irrelevant for the majority of those directly authorised who are not affected by 15-year plus claims and do not take liability with them once they have left their limited company behind. Importantly, it will not reduce the Financial Services Compensation Scheme levy.
Fund managers and banks seem more relaxed about collaborating than most, and have done so to their own advantage for a number of years. Perhaps this is why the IA’s problems appear so dramatic. The money sunk into organisations like the IA and British Bankers Association is significant compared to adviser trade bodies, if the salaries of their chief executives are any indication.
The BBA lobbied strongly to water down a number of the original RDR proposals, under the leadership of Angela Knight. She will not have come cheaply. She has her own Wikipedia page.
Advisers, platforms and providers seem to collaborate far less successfully. The disjointed response to pension freedoms illustrates that. A number of providers declared a false position on what they could offer to avoid giving away a wrongly perceived competitive advantage. It will be interesting to see which platforms and providers implement Isa flexibility, something which is entirely optional.
None of them want to (except perhaps the D2C providers) but most will probably work on the assumption everyone else will develop it so they will have to. Bells and whistles seem to be driven not just by groupthink but by groupthink based on erroneous assumptions.
Fundamentally, the success of a trade body comes down to the force of personality of its chief executive and the number of people she or he can line up behind their message. A good one will be expensive, headstrong and, at some point, will be sacked for those very reasons.
Advisers have a choice of personalities right now. For my money, Keith Richards has the charm and numbers, although the Personal Finance Society is not a trade body per se. With over 40,000 members it has the ability to produce statistically meaningful data, something the FCA places a high value on for decision making.
Resentment for rinsing advisers of cash for exams and titles is the main criticism but chartered is now clearly the designation of choice, and the only one with a chance of public recognition. Its recent media campaigns have shown a commitment to converting the efforts and expense of advisers in taking those exams into public recognition and new client leads, which softens the blow.
I have looked into research over the years about what advisers want from a professional or trade body (rightly, they do not really separate the two) and two things come out: represent me better and get me more clients. Apfa is struggling to fulfil the former and Unbiased is under constant challenge on the latter.
Neither Apfa nor Unbiased generate enough profit to build up the capital reserves needed to manoeuvre and grow, something which bit the much loved Institute of Financial Planning in the end. Newcomers will find it incredibly difficult to attract members; it can take years.
The PFS under Keith Richards seems to be making inroads into both adviser representation and lead generation now through some high profile lobbying, its online directory and public promotion of chartered status. Wisely, it has avoided making big promises on either.
Although for now, there is only one Keith Richards with a Wikipedia page.
Phil Young is managing director of Threesixty