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Who is real winner in joint venture?

The news that Aifa and IFA Promotion are launching a new company to market independent advice appears to have put the ball firmly back into the IFA court by giving greater control over marketing strategy.

Aifa and IFAP each take a 50 per cent share in the new company, called Advice First. The aim of the company is to act as a strategic board, setting a combined policy on how to promote the IFA sector.

The board will be made up of Aifa and IFAP directors and will effectively tell IFAP what to do but it will not have any powers to influence Aifa, which will continue its own work free from the product provider interference that IFAP&#39s budget decrees.

Aifa director general Paul Smee appears to have ach-ieved a coup in the battle of the trade bodies. Advice First&#39s board consists of five Aifa and five IFAP representatives, meaning Aifa can influence IFAP but Aifa maintains its independent stance.

The more cynical in the industry say IFAP is now ess-entially the marketing department of Aifa.

Smee says: “This avoids great structural upheaval and allows us to get on with the issues in hand, which in the light of the polarisation review are very big indeed. I did not bring my team together to be a marketing company. It is important that our budgets remain absolutely separate and there is no influence from product providers.”

Foresters Friendly Society head of group marketing and communications and former IFAP marketing manager Steve Dilworth says: “Aifa does seem to have come out of this pretty well unscathed.”

Funding was clearly a stumbling block in the plans for a full-scale merger but keeping Aifa, which is funded by members, separate from the potential influence of product providers which sponsor IFAP proved too difficult to untangle.

A letter obtained by Money Marketing says a merger was discarded because “the pro-cess of winding up and transferring its assets to another organisation for little or no consideration could have proved a difficult and complex exercise”.

IFAs have often failed to see the logic behind the number of trade bodies supposedly representing them. With the first round of chan-ges to polarisation, the lynchpin of independent advice, already lost to the lobbying power of mass-market distribution, the effectiveness of trade organisations is again being questioned.

IFAP and Aifa believe this new venture is a sensible, pragmatic and cost-effective solution to the problems of a full-scale merger and will ensure that promoting IFAs and independent advice is efficient and effective. Because of the input of the Aifa board, they say IFAs are set to have more representation.

Smee says: “There is going to be more IFA input into the new company. They will really feel like they are driving this. This is about servicing and this new company will do a decent servicing job promoting independent advice. We need a concerted, visible campaign to promote independent advice. We have got to keep its profile high and that is why we are doing it together. This is a very practical solution that will get the work of promoting IFAs done.”

IFAP chief executive David Elms says: “The new company will be setting the strategy for IFA Promotion. It is then up to IFAP to implement its views and mobilise resources to achieve that strategy. IFAP&#39s remit does not change. Advertising campaigns and public relations activity still rests with IFAP, as it does now. We are now all working to the same end game.”

IFAP has certainly been coming under fire to show some results for the sponsorship it receives and effectiveness of its campaigning.

Dilworth says: “IFAP has for several years struggled to cement its role in the market and part of the problem is with funding. Major sponsors put up large amounts of money each year but there are doubts as to the effectiveness of the campaign.

The PR campaign has been very effective but the advertising is not so successful. They have produced inq-uiries but IFAs are not convinced they have received much business from it.”

Many IFAs feel IFAP has not done much to promote their cause at grassroots level and are sceptical that Advice First will make a real difference to their business.

Stuart & Co partner Colin Barrett says: “I thought IFAP should have been doing this anyway. But they are not agg-ressive enough. IFAs deserve better representation and more lobbying done in a traditional way. If IFAs have a good story to tell, why aren&#39t they telling it?”

Roberts Clark director Ashley Clark says: “Aifa and IFAP joining forces may be good in terms of combining experience, ideas and, more importantly, funding to raise awareness. It would appear that we are losing a separate voice in IFAP and getting two voices singing from the same hymn sheet. It sounds like the same voice to me when it is clear and at other times with a slight croak.”

IFAP and Aifa are keen to make clear the new venture is not a precursor to a full-scale merger. But the industry is not convinced, believing Aifa is waiting in the wings to stage a full-scale takeover.

Dilworth says: “This app-roach does make sense but will probably lead to further consolidation further down the line. There needs to be one body and one voice, so they have got to go down that route. Aifa will have to compromise its principles on funding or IFAs will have to be willing to pay bigger subscription fees.

“IFAP found it difficult to get meaningful funding from IFAs. They just were not willing to put their hands in their pockets. IFAs have got to understand that if they want publicity they will have to pay for it.”

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