The Independent Financial Advisers Association of Australia (IFAAA) is attempting to carve out a bigger niche for itself amid the shifting landscape of industry and professional associations.
The Independent Financial Advisers Association of Australia (IFAAA) is attempting to carve out a bigger niche for itself amid the shifting landscape of industry and professional associations.
This is reflected in financial planning education standards, as Australia’s financial institutions have rushed to set new minimum requirements in recent months.
Driven by a combination of factors, these include public and regulatory concern over recent high profile financial planning scandals, the Senate Inquiry, Financial Systems Inquiry and ongoing Parliamentary Joint Committee.
Some of these education standards require membership of the Financial Planning Association (FPA), or the Association of Financial Advisers (AFA) membership, or both. Others, such as the Commonwealth Bank’s standards, also recognise the accounting professional associations.
However, independent financial planners are opening up another front.
Daniel Brammall, head of the Independent Financial Advisers Association of Australia (IFAAA), believes the government missed a major consumer protection opportunity when it omitted remuneration details from its enhanced adviser register.
“The two things it’s omitting are things the consumer really needs to know, it’s supposed to be a register for the consumer,” says Daniel Brammall, also principal of Brocktons Independent Advisory.
He refers to the adviser’s Financial Services Guide (FSG) and a statement indicating whether they are legally ‘independent’.
Brammall spoke with Professional Planner just two weeks ahead of the IFAAA’s Symposium, a first for the organisation.
He says the IFAAA is receiving strong interest from interested financial planners, with the event open to bank aligned, non-aligned and independent planners alike.
“I don’t know how many memberships we’ll get from the symposium….one point of it is to let consumers know what independence is.”
What is independence?
He points to a lack of detailed understanding of what the term independent means in this context, as defined in the Corporations Act.
“We get a lot of application interviews with potential members,” Bramall says, but many are knocked back because they don’t meet the legal definition.
“We have a couple of interviews a week with applicants who are confident they’re independent, and they realise that after we go through the rigour of the application process.”
Brammall explains the IFAAA is approached by a number of practices that are medium sized and not affiliated with product manufacturers. In some of these, the dealer allows the financial planner to run the practice the way they want, including allowing them to fully rebate commissions.
“Some are behaving like they’re independent, but because they’re affiliated with a dealer that does allow other representatives to receive commissons, they don’t qualify as independent.”
Symposium registrations
“So far we’ve got industry stakeholders who’ve registered, and also the financial planners,” Brammall says.
He says the idea for the Symposium initially grew form simply wanting to get the IFAAA’s membership of nine practices and 13 financial advisers to meet in a single location.
“We wanted just our membership to get together in a room – we often hold Skype and online meetings…but many hadn’t met face to face.
“We started to get some interest from people saying they wanted to come along and find out about independence,” says Brammall.
“Many were asking ‘because I’m independently owned, but how do I say that I’m practicing the gold standard that you guys practice?’”
Expected outcome
“One of the biggest concerns that the financial planning community have is their lack of independence, whether it’s incentivised remuneration, or ownership through product manufacturers.”
While he’s hopeful they will get a bump in membership numbers from the event, Brammall is also realistic.
“We don’t think we’ll ever have a majority of financial planners. We would like our financial planners to be genuinely independent. We’re under no delusions about how it’s going to play out.
“If there are really 18,000 financial planners in Australia, I’m guessing maybe 1 per cent would be independent. I think that’s the market share available for us at the moment.”
Not taking on the competition
“Eighty per cent [of practices] are actually run through an institution. When you’ve got that happening, it’s hardly likely we’re going to take membership away form the FPA necessarily.
“But they’re so big, they’re hindered by their size…sometimes you wonder if the tail is wagging the dog,” Brammall says.
