The CEO of the AIOFP, Peter Johnston, reports on the current, four hottest industry issues.


The recent QAR document is a cleverly positioned paper that has tantalized most stakeholders with suggestions that appeal to their ‘wish list’. This is why there is an initial reaction of ‘wide spread support’ and a ‘breath of fresh air…’ until the fine print is understood of course.

Advisers are attracted to the removal of the compliance duplications and irrelevant paperwork, Institutions have a pathway back into advice and Super fund’s would have flexibility with funding and structure. It has been designed to extract widespread support based on micro specific self – interested items, not what’s best for the industry in general.

Ms Levy has largely forgotten all about the other key stakeholder who is paying her fees to complete this task – the consumer.

Stating that consumers will get access to more cost – effective advice is not good enough, recent history has clearly demonstrated that it is the quality of advice that counts, poor advice is worse than no advice.

Over the past 30 years the worst outcome for consumers and the advice community in general has been Institutions getting into advice/wealth management with their vertical integration approach and subsequent manipulations. Consumers have been hoodwinked into their well below par or failed funds and essentially mislead about the origins and ownership of their ‘independent looking’ advice practices.

It could be argued that considering the $40 billion of failed funds since 2007 [and beyond] many consumers would have been better off NOT getting any advice from the Institutions and leave their money in a savings account.

The advice community has already done the hard yards over the past 15 years with FOFA/Ripoll Enquiry to transition out of the investment product commission culture and establish a true professional status. Let’s don’t get ‘sucked into’ another Liberal Party manipulation from their well – deserved grave to support their donors.

This is why the AIOFP has found itself in a unique position recently with supporting the Consumer groups call to not remove the ‘best interests’ aspect’ of advice. The ‘best advice’ replacement suggestion is playing into the conflicted hands of the Institutions to avoid accountability with their digital advice and/or vertical integration aspirations. We think the ‘best interest’ duty should be maintained, further detail and justification will be in our response Paper due out shortly.

It is rather ironic that all the compliance elimination ‘baits’ put forward by Ms Levy are those which Hume/O’Dywer/Frydenberg originally put in place to intimidate and starve Advisers out of the industry. What a pathetic indictment of the past Government.

Let’s do not forget that Ms Levy’s suggestions are just that, Minister Jones has total control over what is adopted and what is not. We are expecting the Minister to ‘cherry pick’ some of Ms Levy’s valid suggestions then ignore the rest.

Our position is quite clear and relatively simple on advice structure going forward, remove all the unnecessary compliance ‘junk’, no cross subsidization, allow low-cost general advice and everyone pays, no exceptions.

We had a meeting today with a US based Financial Services Marketing expert who rated Robo Advice as a 3 out of 10 for successful implementation around the world. Like the UK/NZ experience with risk commission and LIF, why don’t our bureaucrats listen to and observe off – shore trends and experience?

FPA/AFA Merger

It is not entirely unexpected after both breached the most critical element any organization must have with their shareholders/members – TRUST.

Their alliance with the FSC and then Minister Kelly O’Dywer to support the LIF/FASEA Legislation was a total disgrace and will never be forgiven or forgotten. How can you forget 29 suicide affected families and the widespread mental health misery their actions have caused?

We assume the AFA are financially struggling and their involvement will be a subservient role with the cash rich FPA. It should also be noted that much of the millions in procession of the FPA originated from the Banking sector support over many years to divide and rule our industry and essentially work against the advice communities’ best interests.

This is why the AIOFP was established in 1998 to combat this environment.

An interesting angle on this merger will be the adoption of who’s constitutional rules will member’s honor? The FPA’s first obligation is to consumers NOT advisers and the reverse for the AFA.

Furthermore, the FPA have a fearsome Member Disciplinary regime that attacks members after they have been mauled by AFCA or ASIC, the question of AFA members wanting to be subject to that type of treatment will be an interesting outcome to observe. We understand the FPA spends $1 million pa of members money on this Disciplinary process to attack ‘battle weary’ members with fines and suspension, we think ASIC attention is sufficient.

Considering there are 14 Associations in and around our industry the merging of 2 is welcomed. If the new merged entity does change its focus to representing Advisers, we suggest finally putting a former Adviser in charge who understands what Advisers go through. The past procession of former institutionally sourced CEOs for both entities sums up the past political direction and why the Advice community has at times suffered treacherous outcomes.

Exam Cliff

The grandfathering for current qualifying Advisers who need to pass the Exam sometime in the future to stay in the industry is a pleasing aspect. We also think similar conditions should apply to those who prematurely left the industry over the past 5 or so years to re – enter under the previous rules. The same should also apply to those who had severe health problems that prevented them from sitting for past exams.

The fact that there are low numbers of client books are on the market is an encouraging sign that most have set a Plan B strategy in place and executed. The most popular structure is changing the role from Adviser to Administrator of the book liaising/baby sitting clients on a high percentage of the gross revenue and using a third-party licensed person to write any new business. Make sure you have a clause in the agreement that if your status reverts to original conditions by passing the Exam you have that flexibility to change back.


The recent reports in The Australian does not surprise. The Institutions are facing a multi – billion payout and will be using their past ‘donation muscle’ to all sides of politics to mitigate the circumstances. We need affected consumers to stand up and/or Advisers need to create a ‘war chest of cash’ by the next election to influence outcomes – its all about the weight of money unfortunately.

Overall, we think things are going generally in the right direction.


Peter Johnston | Executive Director
Association of Independently Owned Financial Professionals
Suite 1211, 1 Queens Road, Melbourne VIC 3004
P 1800 111 203, d 03 9863 7574, m 0418 857 621 | Download my business card

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