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Stay with Aifa

Shortly after rejoining Money Marketing as a columnist, the editor asked me to come into the office to have my picture taken.

Other writers, including fellow columnist Robert Reid, were also invited to come along for the photo session. On the editor’s instructions, the snapper took several different pictures of Rob and myself, including some where we were, respectively, shaking our fists downwards and upwards.

The theory was that if we were ever to disagree violently with each other, the appropriate fist-shaking pictures could be inserted. I don’t recall a time when that has been necessary.

Rob is one of the people I respect most in the industry. However, when I read last week that he is to let his membership of Aifa lapse because he believes the organisation is “entrenched in its views”, I found myself disagreeing violently with his actions.

Rob is quoted as saying that “he believes the trade body is entrenched in its views about the current retail distribution review, appearing to be committed to maintaining the status quo and unwilling to listen to new ideas”.

Aifa director-general Chris Cummings professes himself “deeply disappointed and perplexed.”

To a certain extent, I can understand where Rob is coming from. One of the dangers for any trade association and its leadership is always that of where you place yourself in relation to your members.

If you sit squarely with the main body of members, you risk being overtaken by events as they unfold. If you stand too far ahead, they will not follow you and you risk a mutiny.

Chris has had to perform this balancing act at Aifa ever since he became its DG. He knows – as the letters pages and readers’ polls all make clear – that the majority of individual members of Aifa, in so far as they can be bothered to belong, are a fairly conservative lot, with a small “c”. Certainly, the pool of members that Alfa would hope to recruit from is that way inclined.

In so far as they have any opinions on the subject, the majority of IFAs would probably like to maintain the status quo. Most are product-driven advisers, not holistic financial planners.

The current payment menu system has worked in their favour, ensuring multi-ties are kept at bay by allowing them to keep working as they have always done, with the merest hint of a fig leaf cover in relation to fee-charging.

Aifa has to take those views into account. Even more important, in a situation where a truly radical root-and-branch overhaul of the current retail distribution system is likely to lead to hundreds of firms being driven out of the IFA sector, it is hardly surprising that the trade body’s leadership are unwilling to sign a blank cheque to any radical proposals.

That is why, unfor-tunately, I do regard with some scepticism the insistence by Chris Cummings that former Tenet group chairman Barry Kayes, who is chairing Aifa’s distribution review working group, has attacked “yesterday’s answers to yesterday’s questions” and genuinely wants “new thinking” on this issue. Especially when I read Chris also saying: “There has never been a time when we have listened more to members” – a clear danger sign if ever there was one.

In any case, I would feel a lot more confidence in Aifa’s willingness to change its spots if Barry Kayes had actually criticised those who want to give “yesterday’s answers” to today’s questions.

So, if that’s what I believe, why bother sticking with Aifa? The main reason is that, deep down, I suspect that Chris and his leading officials know if they try to respond to the retail distribution review by offering up a permutation of the current system as the solution to the problems facing the industry, they will be gobbled up alive.

They will be forced, despite themselves and the conservatism of many members, to come up with something more palatable to the FSA. That is not to say it will be acceptable but at least it will be a start.

My second reason is that I also believe that nothing Alfa says or does – or any other IFA-based organisation for that matter – will hold back the tsunami likely to sweep across the sector in the next year or so.

What Aifa may be able to do is manage the process to ensure as few casualties as possible, then help in the rebuilding process once it becomes clear how many old-style IFA businesses have been overwhelmed by changes forced on the industry.

However, for that to happen, you need a viable trade body with an active membership that includes some of the best brains available. It needs real-life experiences of how it is possible to cope with the changes that will be forced on IFAs.

It will also require advice on new business models that can help advisers who will otherwise leave the industry or move into multi-tied relationships.

It is for these reasons that I believe it would be better if Robert Reid and those who think like him remain in Alfa for the time being.

He will still be able to contribute to the debate within the organisation – even if, in my view, they need him more than he needs them.

nic@inspiredmoney.co.uk

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