The AIOFP says, FRIENDS and ENEMIES – WE NEED TO ACT

The Advice Profession is on the precipice of a precarious and potentially lethal cliff, we need to act, please share this paper with anyone from the Profession.

There is an old saying in Politics, ‘keep your friends close, BUT your enemies closer’. This, in conjunction with the ‘divide and rule’ strategy has been extensively used against the Advice Profession over the past 30 years with stunning success. Ever since the Banks/Institutions directly infiltrated the FPA/AFA with massive financial support and the Financial Services Council [FSC] was the preferred FPA/AFA selected Canberra lobbyist, the Advice Profession has been in decline and poorly treated in Canberra.

It is time to address the ‘elephant’ in the room of Financial Adviser politics, we are at a critical juncture of the Advice Professions survival. This paper will no doubt polarise opinions and ruffle some well placed feathers, but it is designed to do just that. We must learn from our past mistakes or most Advisers will perish at the hands of the Compensation Scheme of Last Resort [CSLR] manipulation.

It is not hard to be bizarrely in awe of the political achievements of the FSC over the years but unfortunately it has been against the best interests of the Advice Profession. They have overachieved for the Institutional sector and inflicted immeasurable pain on the Advice Profession.

FSC has been responsible for delivering LIF, FASEA, Grandfathered revenue ban, unwanted compliance outcomes and the final [and deadly] re -structure of the CSLR operating conditions. With the Banks out of advice they have been busy over the past few years trying to recruit Financial Advisers into their membership to legitimise their Adviser credentials in Canberra. We cannot let this happen.

It is political and commercial reality that any Association that is predominately funded by the Institutions and has a majority of Institutional Executives on the board will be favouring policies that benefit their dominate membership faction.

It can therefore be argued that Advisers in the FSC membership are only giving their membership fees and political capital to the FSC to be ultimately used against themselves, recent history has clearly demonstrated this outcome. Adviser members will only give the FSC an implied mandate to represent the Advice Profession in Canberra with the Politicians – we cannot afford this to happen.

There is market speculation that the Banks want to get back into Advice at some future point, are these questions relevant?

• Are the Banks waiting for the predicted CSLR devastation of Independent Advisers to occur before acting?
• Are the FSC induced CSLR changes and the predicted damage to Advisers an unintended consequence?
• Or is the CSLR manipulation the final lethal chapter from the 2014 – 2022 FSC play book to cull Advisers?

Whatever it is, the Advice Profession needs to distance itself from the FSC, we cannot allow them to leverage off the Advice Profession’s growing credibility in Canberra. Furthermore, we must counter any attempt by the FSC to convince the Minister that the Advice Profession supports the CSLR in its current form. There is no doubt this outcome was a crowning glory for the FSC with their Institutional members but is cataclysmic to all current Advisers and a major disincentive for any graduate considering entering our Profession.

The Advice Profession is doomed in its current form if the Minister does not address the CSLR circumstances.

We encourage all Advisers who are members of any Association that has a working relationship with the FSC to demand immediate cessation of the activities. We cannot understand why any Advice focussed Association would have a positive relationship with the FSC after the utter carnage they have inflicted on the Advice Profession over the years.

The FSC are brilliant but lethal to the survival of the Advice Profession. We will be presenting this document and its content to the Minister for consideration.