Members of the Financial Planning Association and the Association of Financial Advisers have given their respective boards the green light to create the most significant financial advice representative body that the profession has ever seen.
More than 96 per cent of around 2900 members of the two associations voted in favour of merging the organisations to form the Financial Advice Association of Australia.
Despite the hefty 75 per cent threshold required to approve the merger, across all resolutions, an average of 96.5 per cent of AFA votes and 96.7 per cent of FPA votes were in favour.
The merger is expected to be legally completed by 3 April 2023, with a transition period running until 1 July to allow for adoption of the new name and constitution, finalising and launching a new brand and logo, forming the new board, and transitioning members to the new association.
With an expected membership of around 13,000 – subject to all members renewing their memberships in coming months – the association will represent a greater proportion of the advice profession than any other single organisation, and its position as an advocate with consumers and policymakers will be unparalleled.
When it speaks to Canberra, it will be heard, and as the pre-eminent financial advice body it will play a leading role in promoting the benefits of advice to the Australian public. The merger comes at a time the industry is being consulted on the Quality of Advice Review proposals.
The initial announcement of the merger laid out the executive structure of the board and executive team, with FPA chief executive Sarah Abood leading the new association and AFA chief Phil Anderson taking a new role as general manager of transition.
The merged association will have 12 directors, made up of four from the AFA and eight from the FPA. Elections in November this year will see three of the eight directors either replaced or re-elected. Apart from these elections, the initial board will remain in place for three years.
Abood said a high priority of the new association will be advocacy, focused initially on the Quality of Advice Review.
But the new association will also be focused on adviser education standards.
FPA chair David Sharpe noted that even though both associations had worked to get the merger over the line, the real hard work begins now. There’s much more to creating a new advice body than coming up with a new name and commissioning a new logo.
“We worked bloody hard,” Sharpe said during a media briefing on Tuesday afternoon.
AFA president Sam Perera said the newly created association would be running national roadshow in May as a demonstration to all members of the two associations coming together. He said the successful vote had come at “a crucial turning point” for the advice industry, and the association would be a “strong, united voice” in representing advisers.
A broad-based representative organisation faces its own challenges. With members representing such a broad cross-section of the advice community, there will inevitably be matters on which its membership is divided.
Unlike some associations, whose members are closely united on a handful of quite narrow issues, the board and the executive of the newly formed entity will find the politics of consensus challenging.
But in its favour is the simple fact that over time, the issues that divided the FPA and the AFA became so much fewer than the issues that united them. The associations have worked together on a number of advice-related issues in recent years, and they have come to share a very similar view of the big picture.
This article was edited on 2 March 2023 to remove any references to a new association name which has yet to be finalised.
One area that the merged entity will need to work on, is that in order for the Advised Life Insurance sector to be able to regroup and grow, they need to recognise that the current process and regulatory regime is making it much worse.
The FPA have NEVER understood how Life Insurance advice works in the real world and the AFA need to make sure that they are not outvoted and moved to the sidelines when the discussions around how best to move forward for the Life Insurance sector arise.
The Government, the Regulators, the FPA and vested interest groups such as the Education lobbyists and the totally out of touch Choice, had their say and their “improvements” were a TOTAL DISASTER and still are with how they interpreted the best way forward for risk advice.
There is a reason why Life Insurance New Business has plummeted and if we take out the New Business where disgruntled clients demanded action on their insane premium hikes, then true New Business, from new clients is much lower than the stated figures.
Most of the current premium income is being paid by the older age demographic who will cancel or dramatically reduce their policies within 5 years.
With most advisers scoping out Life Insurance advice and barely a handful of new Advisers joining the Industry as risk specialists, there has been NIL intelligent discussion on how best to fix the obvious recruitment road blocks, followed by the coming avalanche of policy cancellations due to rising interest payments on loans and tightened budgets for all Australians with the added joy of higher inflation.
The new association MUST push for the separation of risk advice from Investment advice, with appropriate upfront and ongoing education that is fit for purpose.
The current regime is the reason for the massive decline and it is now up to everyone to open their eyes and ears, recognise the REAL issues and act accordingly.
There is an urgent need for 20,000 risk specialists to service the 2 million Businesses and 12 million Australians who need risk advice, though cannot seem to find an Adviser who is prepared to offer this service without needing to include Investment advice and charge thousands of dollars to make it viable for the Advice practices.