“If you do not change direction, you might end up where you are heading.”
— Lao Tzu, FSC Delegate
My thoughts about the FAAA Conference
In case you missed it, May 2023 saw the introduction of the Financial Advice Association of Australia (“FAAA”) into polite society.
It may have been unthinkable ten-years ago, but for a variety of obviously non-financial reasons, the Montagues and Capulets of adviser associations (The Financial Planning Association (“FPA”) and the Association of Financial Advisers (“AFA”) buried their historical acrimony to create a single representative association for advisers.
The United Associations Roadshow held in Sydney earlier this month was the FAAA’s coming-out party and, in my view, was also a spectacular success. These events are often little more than exercises in self-promotion and revenue-raising, but this was palpably different: there was sense of hope, perhaps even an expectation, that this event would not only set the strategic and philosophical direction of the FAAA, but for financial advisers generally. It was a longer and more expensive event than the usual roadshow, but I took a lot from the event.
I’m not going to cover every aspect of the conference, but I will share what affected me.
What makes the FAAA different?
Sarah Abood and David Sharpe made it clear in their sessions that advisers are very much at the core of the new organisation and that advisers would form the majority of the Board for the Association going forward.
Encouragingly, the FAAA is genuinely trying to reduce costs for advice practices by:
● Asking ASIC to maintain its Industry Levy freeze;
● Asking ASIC to absorb the cost of updating the FAR with the new FAAA membership information;
● Advocating for the CSLR to expand the scheme to cover all members of AFCA and ensure that advisers are not the sole bearers of the cost of the scheme when advisers already have professional indemnity insurance for this purpose.
The FAAA is rightly opposing the idea that superannuation members should collectively fund complex advice for members other than themselves. They also shone a light on the little-publicised MySuper performance reporting that, in about 6 months time, may extend to all superannuation funds in the Australian marketplace. Advisers will need strong advocacy from the FAAA to ensure that this does not unfairly burden an already over-worked and disillusioned adviser workforce.
Disappointingly though, the FAAA’s position in support of using the proposed QAR non-relevant provider category as a pathway for adviser development seems inherently flawed. In any professional service, mentorship comes from experienced practitioners. Large superannuation funds, banks and financial institutions have the resources to hire most non-relevant providers, which biases this pathway towards product-oriented environments and distribution.
This last point, on reflection, seems consistent with the FAAA’s embrace of product issuers.
Quick hits
“I have seen the future of horror”
AFCA’s Lead Ombudsman Shail Singh presented. It was encouraging to see such a popular and adviser-centric organisation making themselves accessible and working in collaboration with the FAAA. This openess, together with AFCA’s new user-pays model, might not change advisers’ perception of AFCA but I think it is an encouraging step in the right direction and I’m pleased that AFCA’s new funding model means that those who repeatedly breach clients’ trust will pay the most.
“Extraordinary, wildly entertaining … a powerful new perspective”
I heard from advisers who have built successful businesses around putting their clients first, learnt about advocacy work and was told about the inroads being made the with ATO around tax deductibility of financial advice fees. Assured Support has advocated strongly for the advice profession over many years, and used data and practical experience to show the progress that’s been made, so it’s good to see others starting to do so too. Good news stories need to be shared so that Australians can start to see the real benefits they will reap from engaging trusted, advice professionals. Most media coverage of advice is a combination of obvious paid marketing, metaphorical obituaries or advice train wrecks; a more positive, and more believable, perspective is necessary and I hope that the FAAA will promote more of this wherever they can.
“Fascinating. eye-opening”
I noted that many presenters expressed concern about the staggeringly low number of advisers nationally. It may be terrible that there are only 1200 risk advisers in Australia , but it seems insincere to express concern given that it was the professional associations’ lack of support for risk advisers that led to this outcome. The FAAA’s position requesting APRA to permanently postpone 5 yearly underwriting requirements for IDII, while well-intended, is ‘too little too late’. So many legacy products have been re-priced so aggressively that policyholders are struggling to pay premiums and maintain cover. The insurers’ material contribution to the under-insurance problem was briefly addressed but, unsurprisingly, neither their product marketing tactics, nor their support for LIF, were comprehensively discussed.
I did notice that many of these product providers had a strong marketing presence at the conference and ample opportunity to promote themselves in the exhibition areas outside the ballroom. I also noticed that they were provided with premium seating in the first two centre rows of the ballroom. The FAAA may need partners to finance their events, but these partners shouldn’t be prioritised over the members that choose to spend their discretionary income to attend an event offered by their association. Adviser members were left to figure out where to sit around them, which is likely how advisers felt historically – sitting on the sidelines while product manufacturers and the larger end of town take the leading role.
I understand the commercial reality and empathise with the plight of the FAAA. Even though the swift merger was not at all driven by financial issues, dramatically reduced adviser numbers have created a far smaller pool of financial resources from which the FAAA can draw. I don’t object to product providers making themselves available in an adviser-led forum to educate themselves about what might be available to their clients but, if the FAAA genuinely believes that advisers are the core of their organisation, it would be nice to show advisers how much they matter; perhaps by inviting those long-tenured, locally-influential or hard-working advisers to sit front-and-centre, to be appreciated by their peers and to have their contribution acknowledged.
An upbeat ending
I’m positive about the future of the emerging advice profession and I hope that the FAAA will learn from the past and avoid the previous associations’ profound and public failures to advocate for advisers and support an emerging advice profession. At the very least, there should be far less public contradiction and inconsistent advocacy. In order to be successful, and avoid becoming an FSC sub-committee, the FAAA will need to better manage their relationship with product manufacturers and deliver on their commitment to serving the advisers that financially support the FAAA and drive the increasing professionalism of our industry. They need less self-promotion and, instead, more determined action directed at helping the advice industry evolve into an advice profession independent of product manufacturers and external interests.
