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Nic Cicutti: Aifa is in a critical state

Well, there we have it. If ever proof were needed of the weakness of an organisation – at least in the mind of the person supposedly leading it – it came with the resignation of Aifa director general Stephen Gay within months of taking up the job in the first place.

Harsh? Up to a point, perhaps. But it is worth remembering that this new appointment of Gay as the Association of British Insurers director of life, savings and protection will have been brokered weeks if not months ago, as Aifa’s boss presumably underwent a series of interviews to establish his suitability for the new job.

In other words, even as he was purportedly struggling with a diminishing budget and trying to establish some kind of refreshed identity for Aifa, Stephen Gay was already breaking bread with the ABI and proposing to jump ship.

Don’t get me wrong, there are times when all of us have found ourselves in a job we wish we hadn’t taken, when we realise we have made a mistake of massive proportions and wish we could get the hell out of there right away.

If there is anything to be said to Gay’s credit, it is the fact that he has not faffed about. He did the right thing for himself, if not Aifa, and he did it quickly and decisively.

What IFAs need to be clear about, however, is the consequence and the implications of Gay’s imminent departure. First, forget the pathetic attempts at self-hagiography in Gay’s departure statement.

Cutting an organisation’s budget is not rocket science. I have been at the sharp end myself and while emotionally challenging at times, what it ultimately involves is being brutal, sacking people and cutting back on photocopier paper.

Similarly, the much trumpeted claims that Aifa played a key role in the Financial Ombudsman Service decision to potentially increase from three to 25 the complaints it will consider before charging a fee is simply a gesture of realpolitik on the part of the FOS.

The key problem, which even the FOS realised, was that some IFAs were being swamped with claims and went into default.

As for “successful” lobbying of the Treasury select committee, by far the greatest part of the spadework was carried out by scores of individual IFAs, who submitted their own statements to the TSC, as well as a myriad other companies and trade bodies. And in any event, the lobbying was a failure, it failed to change minds at the FSA and advisers are still left with essentially the same regulatory landscape as before.

The brutal truth is that far from leaving Aifa in a healthier position than he found it in, with all sorts of mythical achievements now in place, the only current trade body for IFAs is now in a critical state.

The reason for that goes back far further than the past 12 months, although Gay’s resignation has brought it into sharp relief. Crucially, Aifa has failed to create a genuine vision of what it really stands for.

It had, and possibly still has, the potential to offer its own members – and the wider public – an alternative concept of a trade organisation with a passionate commitment to ethical independent advice, standing up for the interests of clients against the depredations of an industry which continues to rip them off.

Aifa should have been celebrating and publicising the efforts of scores of small IFAs, many of whom write to me, telling me how they work endless hours to resolve the problems caused to their clients by big banks and insurers, often for little or no financial gain. For them, genuine independence is a moral crusade not just a business decision.

Clearly not for Aifa. It has dumped its commitment to independent financial advice as being at the very core of its organisational structure. Within 12 months almost anyone, probably even me, will be allowed to join. The task of the organisation is presented as the dull and pragmatic one of “representing” all advisers responsibly within the corridors of power.

Such a message is not just boring, it also fails to articulate a role for advisers among the general public and within society, a role they can be proud of and which then gives them the ethical high ground to demand proper regulation of their side of the industry.

Those who appointed Stephen Gay will now be questioning how they could have made such an appalling error of judgment. In truth, the error did not lie in appointing someone straight from the life industry. It was the absence of an understanding of how to lead IFAs to a new promised land, as well as what it is and where it lies.

It is probably not too late to start again but time is fast running out.

Nic Cicutti can be contacted at


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There are 23 comments at the moment, we would love to hear your opinion too.

  1. Nic

    Please investigate the real reason for his departure, many thanks.

  2. Nic’s article is an accurate reading of the situation and no amount of whitewashing, smooth talking or PR spin can avoid the bulk of advisers sharing these views.

  3. Spot on, but I disagree with the last bit….by appointing an Old Model life company man, AIFA (now should be called ARFA) ensured that it would become a mouthpiece for large insurers and have nothing to say for IFAs. Many said that at the start, and have been proven correct within a year.

    It is unlikely that ARFA will have any IFAs in it this time next year. Some will join IFA Center, others will just do without a trade body.

  4. And quite a few will join Adviser Alliance!

  5. Becoming a headcase IFA 19th January 2012 at 12:37 pm

    A lot of IFAs predicted Gay’s appointment would be catastrophic for the organisation from the moment it was announced, and they have been proven right. AIFA should have taken a stronger line against the RDR and they would have received a lot more support from small IFAs. If they had been more vocal and active they could even have organised a demonstration by IFAs (but they couldn’t possibly imagine something so crass could they, especially with Marvin there). I would have demonstrated and I have spoken to others that would have, as well. It just need a respected body that had the ability to get it together.

    As it is we will get nothing from the authorities because they know we will just sit back and take the crap they throw at us.

    Good luck with your future Marvin, although I don’t think you will need it as much as we do.

  6. As soon as AIFA admitted tied agents it became a poorly funded version of PFS, and therefore redundant as an organisation.

    What is needed is an IFA organisation with deep enough pockets to lobby effectively and that means one that is backed by the few remaining IFA only offices.

  7. What AIFA should be doing now is to work out whose idea it was in the first place to appoint a man committed to the Life Assurance business and not one iota to IFA,s When it has worked that out then that person or persons should also go and get whom ever is left to appoint those who really do have the interests of the ifa population at heart

  8. For the first time ever I agree with everything Nic says, Aifa are a complete joke, They had their chance to do somthing great for the IFA and fight against RDR and all its implications (it was never just about exams!!) and they blew it, 3 years ago on Money Markeing pages they promised to fight for a judicial review, it never happened and now they deny they ever said that they would !!!
    I really cant think of anything that they have done that has benefited me or aything that they will do in the future that will benefit me and my fellow IFA’s. Its over!! What we need is an organsation with teeth that will fight hard for its membership. Unfortunatly As far as RDR is concerned its too late!

  9. I remember the heady days when we were well represented by IFA Association director-general Garry Heath. Bring Gary back with a 5 year plan to re-invigorate AIFA, truly represent advisers (IFAs & multi-tied) as a profession worthy of respect instead of being constantly (and unjustifiably) betrayed by the FSA. We need a well known, respected, ‘larger than life’ person at the helm now more than ever.

  10. No one organisation can be set up with any meaningful clout until the regulatory body it is canvassing can be held liable for the lamentable and quite disgraceful failures of its staff and

    Only when a regulator has its activities scrutinised under the rule of law and subject to the Statutory Code for Regulators can we begin to get our industry back into the good books of the public.

    No use blaming people like RBSs Fred the Shred for the banking crisis, look at what the regulator allowed to happen and look at how much harm it has done to consumer confidence in the wake of Lehmans, Integrity, Keydata, Arch Cru etc.

    ANY NEW REGULATOR must be subject to the rule of law.

  11. Rather witter on about cutting costs AIFA should have done more to be attractive to those truly independent IFAs who were only too willing to fund its predecessor.

    Instead it enbraced the networks who were never going to pay the right amount for their membership and were increasingly owned by the providers.

    In his exit release Steve Gay suggested that it was in AIFA’s best interest to always close to the ABI.

    It’s whole reason d’etre is to be close to the consumer.

    The issue is that what AIFA really needs is exactly what its board will not accept and with the RDR cull happening in December the number of IFAs available to set up anything else is ever smaller.

    The ABI has undermined the independence of IFAs, removed its voice and now has ripped its spokesman away. Polarisation is dead . Advice becomes unaffordable to all but the super rich and their major distribution is leaderless.

    Mission accompolished!

  12. Simon Webster 1:03pm Simon, don’t be so short sighted. I am now multi-tied due to necessity but came from an IFA background. I fully support IFAs and the IFA model and have and do campaign in the financial press against the FSA treatment of IFAs. In the advice I do give, I still apply the IFA model for my clients and know that we – both models are in jeopardy of destruction by FSA / FCA. The maxim “united we stand, divided we fall”. We both are advisers to our clients and both affected by the failed policies of the FSA. I have no vested interest in the IFA disappearing, I need you to be strong.

  13. Anyone who doesn’t know better would think IFAs are a bunch of bigots.

  14. I think we all know that it was the previous Director-General, who is mainly responsible for the critical state that AIFA now finds itself in.

  15. 1st wish for 2012 has come to pass; Gay walks plank.

    2nd wish was that Bob Crowe would replace him to put a bit of stick about….. well, one out of two is a reasonable start I supose.

  16. For the first time ever I agree with everything Nic says, Aifa are a complete joke, They had their chance to do somthing great for the IFA and fight against RDR and all its implications (it was never just about exams!!) and they blew it, 3 years ago on Money Markeing pages they promised to fight for a judicial review, it never happened and now they deny they ever said that they would !!!
    I really cant think of anything that they have done that has benefited me or aything that they will do in the future that will benefit me and my fellow IFA’s. Its over!! What we need is an organsation with teeth that will fight hard for its membership. Unfortunatly As far as RDR is concerned its too late!

  17. I forgot my footnote, Come back Gary Heath your Industry needs you !!

  18. An Association of IFAs must surely be run by IFAs for IFAs?

  19. Arnie doesn’t seem to be doing much since his marriage went Pete Tong. Worth an approach I wonder? It would lighten my year to see him sliding round in a Hummer with a huge cigar terrorising Mark Hoban. Meanwhile back in the real world….

  20. I am forever repeating myself THE AIM OF RDR LIKE CP121 DEPOLORISATION, THE MENUE IS to get rid of the IFA. I left years ago when it was obvious that they were not fighting for the IFA.
    Unfortunately we are divided by those who think RDR is only about examinations how wrong can you be….Gary come back join adviser alliance and for the rest of you get joined up so we have one single voice and stop arguing about whether you need new qualifications It is not about that it is about the IFA surviving this onslaught from people who have no understanding of what we have been doing for the last 40 years. Alternatively it is those major companies who have built their own (EMBEDED VALUE) using the IFA model and now want to take over our clients and trail commission. (Note how many are now owned by BANKS.)

  21. Reading this lot I can almost see the regulator’s point of view. CP121 suggested that those who held themselves out to be advisers should ask their clients to pay, explicitly, for advice. AIFA went potty and with quite stunning cleverness ushered in the idiotic menu. IFAs could have embraced the future ten years ago, and RDR would never have happened. They didn’t. And it has. Mr Gay may or may not have been brilliant or useless, but the seeds of the current fiasco were sown shortly after Garry Heath was ushered off the stage.

  22. Rod, you could have chosen to build your own embedded value over the years. All you need is some capital to see you through and take a small recurring charge, like the life cos do. Once your business is mature, you have a large embedded value. It’s your choice. Don’t blame life cos because you never took it

  23. Nic, it’s pretty straight forward. IFA’s need to decide if they want an effective trade body. If they do, they will have to put their hand in their pocket and pay for it. Currently, 50% of AIFA’s income comes from Life Offices which is quite ironic when many IFA’s want to demonstrate their ‘independence’. The other half, which is way short of what it needs to be sustainable, is mainly from Network fees who have negotiated fees FROM THEIR OWN TRADE BODY that are a fraction of the going rate eg about £65 versus £365.

    I had discussions with Steve about how funding could be made more sustainable. I was quite prepared to give MORE financial support in the short term in return for fees being reformed and IFA’s taking more responsibility for its financial affairs. I suspect Steve wasn’t able to persuade the Board to put their own vested interests aside.

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