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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?


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. MM is absolutely correct here. AIFA should represent “whole of market” advisers from Jan 2013 – that will include all those existing IFAs who will be forced to call themselves restricted and will exclude tied and multi-tied agents.

  2. Dennis Burling ACII APFS, Chartered Finalcial Plan 10th November 2011 at 11:13 am

    Well what a surprise – AIFA are not getting enough money from people they are not doing a good job for and where what they do do is totally ignored by the organisations they are trying to influence!!

    My Heart bleeds for them – bless !! – the sooner they are gone the better – we should instead be saving our money to pay the bills when we cant afford to keep going any longer!!

    The problem in this country is that the regulators have now taken over the assylum and the owners cannot get rid of them – all we have to look forward to unfortunately is more and more of the same while paying more and more to fewer fat cats who care nothing about anything other than keeping themselves on the gravy train for as long as they can get away with it.

    We need something/one that is going to stop this continuing to escalate and as I see little way that anyone ( including our beloved government) can now do anything to stop the regulators doing whatever they like, whatever anyone does it will be a waste of time and money – what’s the point anymore !!

    In any event it would appear that come 2013, 80% of advisers will chose to be restricted in any event due to the excessive costs and obligations that will then apply to stay independent so all this talk of a separate body for IFAs is a total waste of time and money (sorry Gill) – well done the regulator – you will finally have won and got rid of us nasty Independents !!

    Bring on the brave new world !!

  3. As I said before, what is to stop specialists calling themselves “Independent Pension Advisers” for example?

    When I asked Hector Sants “what is this RDR all about” he said “we thought that if we raised standards everyone could become a stockbroker”…. not an independent stockbroker though?

    I hope the next regulator will think about all this but I won’t be holding my breath.

    As far as AIFA or any other ‘representative body’ is concerned the main difficulty is convincing firms that persistent contributions actually offer them anything during uncertain times like these.

  4. Of course Paul is right.

    Unfortunately it would seem that a significant minority only want a trade association to be their whinging mouth piece – or on the other hand we have those who either pay very little (thank you Network members) or even worse are complete freeloaders.

    For many of us who do value AIFA as our Trade Body, the value resides in what it is actually good at doing. I shan’t regurgitate its successes – too many don’t want to know and prefer to criticise. But for me the value lies in the ‘heads up’ I get regarding Regulation and associated matters.

    Just two small but vitally important examples:

    Independence/ Restricted. This is a minefield and if you really analyse it many need not worry. Staying Independent is not nearly as onerous as many imagine. (Mainly thanks to the scare mongering by vested interests).

    If you are a member you will get steered through the labyrinthine considerations and options and may well find that your concerns about losing your independent states are ill founded.


    The new reporting requirements. Do you know exactly what will be required, when and in what format? And how you go about sorting the information? If not AIFA is there to help.

    I know that those in Networks get their botties wiped, but for those of us who are directly regulated and paddle our own canoes, these aspects are not only useful, but vital. Sure compliance consultants and service companies can and probably do provide all this info – but at a monthly cost which is probably equivalent to the annual subscription at AIFA.

    If all you want is a trade body that will moan about every possible thing that irks you, then there are other organisations that may suit you better. But I wonder how effective they really are, and whether those up on Mount Olympus actually take any notice. Being continually negative in my view merely denigrates your standing – both with the public – via antipathetic journalistic comment and with the regulator. You just gift criticism. “Oh these greedy cowboys still want to take commission”. “Oh these duffers are against better standards and refuse to take exams”. Whether true or not it’s the perception that counts and as you all know you only get one opportunity to make a good first impression. Being an Olympic champion whinger is not the way to go about it.

  5. Neil F Liversidge 11th November 2011 at 11:18 am

    We’ve discussed how most of the industry wants representation but doesn’t want to pay for it. Apparently it goes further than that. This week I saw some joker on one blog pontificating that AIFA should pay for financial education. Reality disconnect or what?

    This morning I had a phone call from an individual who was somewhat miffed by the fact that I hadn’t responded to his criticism of AIFA on some blog or other. Apparently he is such a legend in his own imagination as to suppose that I must trawl every blog looking for his words of wisdom. He was disappointed to learn I don’t.

    Anyway, his particular whinge was that AIFA hadn’t run a judicial review if the RDR level 4 qualification stipulation wasn’t dropped. He demanded that we run one now. (Presumably this means he’s not level 4 qualified yet.)

    I pointed out that judicial reviews cost a lot of money which we had to fund from membership subscriptions and asked if he was an AIFA member. He repeatedly tried to avoid giving a straight answer. After more repetitions of the question than Paxman managed in the Michael Howard interview he eventually admitted that he wasn’t, becoming somewhat aggressive at this point and saying he wouldn’t pay for anything AIFA did because it wasn’t worth it. Anyway I enlightened him with a few choice words of my own before hanging up. I didn’t order a freeloading timewaster for breakfast so I didn’t feel obliged to take delivery.

    Coincidentally, a friend of mine sent me an article this morning by an old biker friend of mine who writes for the motorcycle retailers’ trade journal British Dealer News. It’s all about how the bike trade whinges all the time but does nothing practical, won’t put its hand in its pocket and certainly does not support the riders’ rights organisation MAG with anywhere near the vigour it should. If anyone would like a copy, just email me. For ‘MAG’ read ‘AIFA’, for ‘dealers’ read ‘IFAs’. .

    Plus ça change, plus c’est la même chose

  6. Neil F Liversidge 11th November 2011 at 11:59 am

    @ Dennis Burling – when you say (above) ‘we should instead be saving our money to pay the bills when we cant afford to keep going any longer!!’ you ARE saving your money. You are not paying anything to AIFA and I’m sure you won’t be paying anything to Gill Cardy or Alan Lakey either. So what’s your problem? Reality check: Whatever any trade body did for you, you still would not pay, because you’d see others paying for you and you’d keep a tight hold on your wallet. Ok, we’ve got the picture, next?

  7. The truth about AIFA and why so many IFAs are not members is quite clear, they have no power to change anything.

    The plain simple truth is that if the Heads of Networks and Major IFA firms had got together and said “Thus far no further, if you ban commission we will close our firms down and if you de-register established advisers just because they have not achieved level 4 before the end of 2012, we will not be paying your fees, we may have had a fighting chance to survive in what is the most difficult trading conditions I have encountered since I became an IFA in 1990.

    Even when there were interest rates at 15%+ for mortgages, trading was still bouyant, with the lowest interest rates on record, the level of mortgages has declined, property markets are stagnant, investment firms are struggling to maintain growth and what does the FSA do, spend millions of our fees on this unnecessary and ill conceived nonsense.

    The Network CEOs and Heads of large IFA firms speaking with One voice, raised, certain, clear and determined would have put RDR to bed forever.

    Instead the craven and cowardly CEOs of these large firms bend the knee and co-operate in the destruction of our sector.

    My father saw action in the last war, his father before him, for the right to free to live our lives without the excessive threat of dictatorial governance.

    That is exactly what we are now seeing, not governance by the people for the people (who incidentally happen to pay their wages) but governance by a few plutocrats whose sole motivation is to ruin and destroy the iFA sector.

    The sooner the CEOs and heads of large IFA firms wake up to this fact, the sooner we may see some changes to the timetable. As it stands even Parliament cannot alter this lemming procession to ruin.

    I call for all CEOs of networks, Heads of Large IFA firms and the Life Offices as well to Stand up, be counted, raise your voice, object, push, threaten, cajole and use your real power to stop this headlong dash towards the cliff edge of 2012, after which no amount of remedial action will achieve anything it will be too late to put right that which has been done wrong, dead people do not miraculously raise up and live again, they remain dead, this the IFA sector will also die, maybe not as fast as some anticipate, but a slow painful and inexorable decline into oblivion.

    Will the last IFA please turn the lights out when they leave.?

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