Can FPA and AFA muster the numbers to merge?
It has been attempted at least twice before and never reached memorandum of understanding stage, but a merger between the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) will still be hard to achieve.
Financial Newswire has confirmed that discussions have been opened up between the FPA and the AFA twice in the last 15 years but did not progress to a stage where anything was put before members of the two organisations.
What is more, there was a recognition that, with respect to the constitution of the FPA, 75% of members would have to vote in favour of a merger for it to be achieved with AFA members similarly having to be committed to such a move.
What is more, there is expected to be member friction around the status of the FPA’s Certified Financial Planning (CFP) designation and the Fellow Chartered Financial Practitioner designation offered by the AFA.
The two organisations have proposed that the CFP designation be the primary designation of any new association. Member feedback yesterday was already signalling dissent.
But it is clear that the imperative for the merger is both financial and demographic. Both organisations have been losing members and the latest data show that there are now 11,264 fewer advisers in the profession than was the cost in 2019.
According to the latest analysis from WealthData, the FPA has 7,257 members who are registered on the Financial Adviser Register (FAR), while the AFA has 2,040. Both organisations have a number of members who are not on the FAR.
However, the bottom line is that a merger of the two groups will result in an organisation with slightly over 9,000 financial advisers in circumstances where the FPA was reporting that it had 13,189 members in its 2020 annual report and 12,049 in 2021.
In announcing the signing of the Memorandum of Understanding, the joint statement from the FPA and AFA said they would be seeking feedback from their members before inviting them to vote on the proposal, probably before the end of calendar 2022.
“The FPA and AFA boards believe there are substantial synergies and other benefits for their respective members from a merger, providing a united voice and stronger advocacy for financial planners and advisers,” it said.
It appears FPA has been losing members at a faster rate than the industry has been losing advisers. Why is this? I would venture it’s because FASEA has laid bare the worthlessness of the CFP designation, which is dragged down by the continuing presence of the under educated “grandfathers”. Real CFP members have realised the pointlessness of a designation that purports to be “the highest standard in financial planning” but clearly is not. They are leaving in droves.
FPA is regressing to an association for grandfathered CFPs, and institutional advisers whose membership fees are paid by their institutional masters. Now FPA is trying to bolster its dwindling numbers by merging with AFA. One wonders if AFA members will be offered a grubby grandfathering CFP deal as a sweetener for merging?
What a pity FPA hasn’t chosen the more radical approach of getting rid of grandfathered CFPs and institutional fee payments, in order to become a genuine professional association with a genuine professional designation. They might actually win back lost members and attract new ones if so. They might also be taken seriously by regulators and politicians for the first time.
A number of advisers remain members of the FPA as the CFP found in the botton of cornflakes box is, lets be blunt, there only qualification. However many Advisers left the FPA following Dante De Gori appearance at the Royal Commission when code monitoring was handed over to ASIC. Many still realised the FPA represents the industry and usually that’s firms with large pockets.
The post by Anon is just incorrect – factually incorrect – please check the annual report for FPA and compare to FAR numbers and you will see that actually FPA has fared better then the industry year on year since this whole FASEA debacle started. Further the comments about CFP professionals and the designation is just a load of rubbish. My guess is that Anon’s hatred of the international CFP designation is more a reflection of his inability to obtain the Certification then it is about anything else. Posts like this are just an embarrassment.
In terms of the actual story – Mike has done his best to bring ‘doubt’ to what is nothing more than a positive announcement. Irrespective, this is going to happen and the vote will exceed the 75% requirement by both sets of members easily. The proposal and the details know so far are reasonable and sensible. FPA and AFA have done well to come to the table and put the interests of the profession before all else. Well Done.
Are you denying that the CFP designation was given to people with no higher education than DFP, at a time when prevailing community standards for the education of professionals were much higher?
Are you denying that these people have been allowed to retain this designation ever since, as long as they pay FPA fees?
Are you denying that these people have never been required to complete the professional standard CFP Certification unit?
Are you denying that because of all this, FASEA gave far less credit to the real CFP course than its high standard warranted?
I have indeed obtained CFP Certification, by completing the high standards of study and assessment that were introduced subsequent to the grandfathers being signed up. I believe the real CFP could, and should, be internationally recognised as the highest standard in financial planning. But unfortunately FPA has trashed the standing of CFP in Australia, through maintaining its grubby grandfathering arrangements. In so doing, it has also undermined its own credibility, and prevented it from becoming a true professional association.
regardless your CEO was accused at the Royal Commission and the FPA found guilty of losing advisers the ability to self-regulate. You never held that body accountable. that says a lot.