The launch of a new trade organisation representing advisers has reignited the debate around the industry’s ability to lobby at the highest level.
This week Money Marketing revealed how former IFA Association director general Garry Heath is launching a new trade body in May for wealth managers and independent and restricted advisers.
Heath says Apfa fails to represent directly authorised advisers and is too reliant on funding from networks on shaky financial ground.
He says: “Nobody knows what Apfa stands for and we cannot continue to drift like this.”
But Apfa director general Chris Hannant warns advisers’ collective voice will be weakened by a competing organisation.
He says: “It is impossible for the FCA or government to have a serious debate with 5,000 advice firms unless they come together to speak with a united voice.”
Do we need another trade body?
Cardy set up the organisation in September 2011 and argued that following Aifa’s rebrand to Apfa and its acceptance of restricted advisers, a separate body was needed for IFAs. However, it only managed to sign up 238 individuals from 102 firms with Cardy saying many of those who promised to join never did. Cardy declined to comment.
Heath says the IFA Centre “was the wrong thing at the wrong time” and that his organisation will accept any type of adviser to stem the risk of the FCA changing definitions “at the stroke of a pen”.
Research conducted by Action Consulting for the Heath Report, a study of the impact of the RDR carried out by Heath earlier this year, found 89 per cent of advisers would consider joining a new trade body.
Of 141 advisers surveyed, 47 per cent said they would join a new trade body, while 42 per cent said they were unsure and would require more details on the organisation to decide. Only 6 per cent said they would definitely not join a new trade body.
Heath is yet to announce subscription fees, while Apfa charges sole practioners £361.50 a year and a 15-strong firm £1,750.
Hannant says around 65 per cent of roughly 20,000 advisers nationwide are members of Apfa.
While some have welcomed the launch of a new trade body, others argue that advisers are better represented by a single organisation.
Highclere Financial Services partner Alan Lakey says: “In an ideal world we would have one effective organisation, but it is absolutely apparent that Apfa is not effective and has no appetite for being so. The options are for Apfa to be replaced, or to have two organisations: one which talks about taking action, and one which actually does it.
“Garry has a reputation for no-nonsense representation and there will be a significant number of advisers who will want to join him.”
Apfa member and Philip J Milton & Company managing director Philip Milton says: “Garry was very effective when he led the IFA Association and it will be welcome to have him petitioning on behalf of advisers again.
“Depending on the costs, I would consider joining his organisation and remaining a member of Apfa.”
But West Riding Personal Financial Solutions managing director Neil Liversidge, who is a member of the Apfa council, says there is no need for a second trade body.
He says: “Dividing our forces would not be helpful. It’s a sad fact that in the adviser community a lot of people moan about Apfa not achieving enough but they don’t want to pay for it.
“Many expect Apfa to achieve miracles on next to nothing. We run on a microscopic budget and deliver a big bang for your buck.”
Irrespective of whether there are one or several trade bodies, some are sceptical of the lobbying power wielded by adviser representatives.
Former Aifa council member and recently retired adviser Harry Katz says: “The question is, if the Treasury select committee can’t get anywhere with the regulator, why does a trade body think it can?
“I was on the Aifa council for six years and cynically I found it very useful because as a sole trader I didn’t outsource my compliance and it meant I knew exactly where I needed to be. But as for whether they are a good way of changing anything, that remains to be seen.”
Last year, Money Marketing research showed in 2013 Apfa only managed to meet with FCA chief executive Martin Wheatley twice. In contrast, the Association of British Insurers met with the Treasury eight times, the Department for Work and Pensions nine times and the FCA three times.
Financial services communications firm Lansons partner and director Ralph Jackson says success for a trade body is measured in three ways: establishing relationships with key stakeholders, such as individuals in the Treasury, establishing coalitions with other organisations – consumer groups, for instance – and finding and nurturing influential “champions”.
He adds: “It used to be the case that the Government just wanted one trade body for each sector, but that has changed. There is a case for a rainbow collection of different bodies, and it’s probably even more necessary now with the pension reforms where advice is critically important for people’s retirement.”
Chris Hannant, director general, Apfa
Apfa is here to represent the views of advisers. I strongly believe that any business, industry or profession is more effectively represented by a single voice. It is impossible for the FCA or government to have a serious debate with 5,000 advice firms unless they come together to speak with a united voice.
Apfa represents all advice firms: large and small; independent and restricted. I believe we are stronger and more effective in having this diversity. We are member run and driven. Our Council is made up of firms of different sizes to ensure we reflect the profession as a whole. Any individual member can get involved and have their say through our consultative group.
Our focus is achieving a better environment for advice firms. Our priorities are the cost of regulation, the liabilities that come with giving advice and ensuring the value of advice is reflected in the policy framework for retirement, for pensions and long-term care.
As trusted stakeholders with policymakers at all levels, we have achieved a significant amount on members’ behalf. Last autumn we successfully persuaded the FCA to reduce the contribution that advisers make to the cost of Pension Wise. The initial proposal of 20 per cent of costs was reduced to 12 per cent, saving financial advisers £3m a year.
Prior to that, we achieved savings for advisers to the funding of MAS with the introduction of a new formula for cost allocation developed by the MAS and trade associations. We stopped a proposed cap on advice charges in the European Parliament from the PRIIPS regulation. And finally, our joint campaign with Zurich for the introduction of a long-stop achieved its first step with the start of the FCA review earlier this year.
Garry Heath, former IFA Association director general
Apfa hardly represents the directly authorised IFA at all. The majority of its funding comes from networks which are themselves not financially stable.
Unfortunately the IFA Centre was the wrong thing at the wrong time. It was a pity that Gill Cardy launched it on her own, and restricted it to independent advisers at a time when a lot of advisers did not know whether they were independent or restricted as the FCA had not finalised the rules.
Any new trade association would not be wise to make a distinction between independent and restricted because the FCA could change the definitions at the stroke of a pen.
Why might an alternative to the IFA Centre succeed? Because my organisation will launch with an experienced team of people, and will factor in DA advisers very strongly. There is a huge group of advisers who are frustrated that no one is doing anything on behalf of the industry.
The switching off of trail commission is a big issue and one we plan to come out pushing hard on. In the long-term we also need more accountability over what the regulator does.
Advisers do not have the leverage of large institutions like banks, and the only way we can get a fair deal is to use democracy. We want to get into parliament, make MPs aware of what the FCA is doing and get questions asked in the House of Commons.
Nobody knows what Apfa stands for and we cannot continue to drift like this.
The big question will be whether the talk about wanting better representation converts into membership.
Nick Bamford, executive director, Informed Choice
We’re members of professional bodies but we’ve never been a member of a trade body. Part of our reasoning for that is the very nature of them is they are full of very diverse firms and individuals, so we struggle to see how they could truly represent all of us.
I sense that Apfa doesn’t always get a lot of support so maybe there is scope for another one, perhaps competition is a good thing in this case.