Why the AFA and FPA merger makes good sense

Mike Taylor

Managing Editor/Publisher, Financial Newswire

7 November 2022

EDITORIAL  

It should come as no surprise to members of the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) that both organisations made losses last financial year. It would have been remarkable if they had not. 

You simply cannot watch the exit of over 40% of the financial adviser population from the profession and expect that organisations which rely upon membership fees and related services income not to be impacted. 

FPA chief executive, Sarah Abood is right when she says that her organisation is financially sound. Astute management over the past decade means that notwithstanding the challenges of the past few years the FPA still has around $12 million in assets. 

Abood also knows that, relative to overall number of financial advisers who have left the profession, the FPA has retained its position as the dominant representative organisation. 

The AFA appears to have lost a greater proportion of members than the FPA but, more importantly, its financial position is parlous with declining membership revenues and relatively modest reserves. 

All of this should convince members of the FPA and the AFA that their best interests will be served by supporting the proposed merger of the two organisations so that they can move forward as a single entity with a solid combined membership and healthy reserves. 

But the merger should not be supported for financial reasons alone. It should be supported because if recent history and current events have taught financial advisers anything, it is that they need a well-resourced and unified voice in Canberra. 

As the Quality of Advice Review (QAR) final report ultimately translates into a series of recommendations to the Government, it will be crucial that the major financial advice organisations lobby hard for the right legislative outcomes because there will be a significant difference between what QAR chair, Michelle Levy, recommends and what the legislative draftsmen ultimately deliver. 

There is already a contest of views on the shaping of the ultimate detail of Levy’ proposals and for financial advisers there remains the danger that their legitimate views will be diminished by the arguments put by vocal and well-organised consumer groups, trade unions and industry superannuation funds. 

The FPA and the AFA are not the only financial services representative organsations who have experienced balance sheet deterioration over the past three years – the Financial Services Council (FSC) has its own challenges, as do the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees. 

The bottom line is that in tough times with margins being pinched, membership of industry associations becomes an increasingly discretionary spend.