How the AFA initiated a financial contingency plan
The Association of Financial Advisers (AFA) has acknowledged receiving $307,429 in “COVID-19 relief” in the year ended 30 June, last year, on its way to an operational loss of $367,800.
The association’s Financial Report revealed a net loss for the 2021 financial year of $15,581 at the same time as its Director’s Report outlined a transaction involving the AFA investment fund triggered by a declining number of “market partners” and a declining membership base.
The publication of the Financial Report has come as the AFA and the Financial Planning Association (FPA) work towards a merger which will be put to members in coming weeks and is expected to be complete by mid-to-late October.
Former academic and Association of Independent Financial Professionals chair, Dr Adrian Raftery has publicly questioned the status of the AFA’s accounts, particularly the situation with respect to its Investment Fund.
The AFA Financial Report states that “The AFA Investment Fund made a total net profit of $15,550 in the 2020/21 FY”, noting that ‘This is recorded as a distribution to the AFA, and then is ultimately reinvested back into the AFA Investment Fund to increase its equity”.
“In the 2020/21 FY the AFA Board requested via a Memorandum of Understanding as the sole beneficiary of the AFA investment fund that due to market partnership consolidation, a declining membership base and the financial impacts that COVID -19 has had on the financial services profession that it may look to the AFA Investment fund during the 2021/22 FY to request a capital amount for “special projects” that will ensure the continued viability and sustainability of the AFA and its members,” the Director’s report said.
“It was requested in the MOU that there be sufficient liquidity of $600,000 should it be required by the AFA at short notice. The AFA board understands that the AFA Investment Fund has pursued an investment strategy consistent with this request,” the Financial Report said.
The balance sheet contained within the Financial Report revealed the manner in which COVID-19 lockdowns and other factors had impacted the organisation with revenue from its conference, roadshows and events during the 2021 financial year a fraction of the 2020 numbers – $288,471 down from $1,208,348.
It also showed that receipts from members and supporters were $3,159,896, down from $4,300,442 the previous year.
The Financial Report showed that the AFA received $140,000 in COVID-19 relief in 2020 and $307,453 in 2021.
Why pay $1,000 a year to a body that is just going to represent the needs of AwareSuper. Not even AwareSuper advisers. I can pay $500 and be a member of FINSIA or the Stockbrokers and Financial Planning Association and also get no return on my money. And because I have an education I don’t need three little letters after my name.
What we’re seeing with the merger of the AFA and the FPA is like seeing two Kodak photography stores merging. Both the FPA and the AFA need to examine their purpose. The why behind they’re in business. What we’re seeing now is a classic example of an industry body a) lacking vision, b) out of touch with members, and c) trying to represent every single sector (especially Union run Super funds) and ultimately they end up serving no one. Financial Planners have had to look at their clients, and rework their business models, but these guys especially the FPA are living in the 80’s still. We’ve got is two failing bodies with poor clarity and vision hoping to merge to fix their problems when the business model itself is broken because they failed to understand their customer. I’m not a fan of the AIOFP at all, but what we’re seeing there is a contrast, a laser like focus a clear vision of who they represent and they’re benefiting.