The CEO of the AIOFP, Peter Johnston, reports on The AIOFP’s strategic move into Asia.

The AIOFP’s strategic move into Asia is based on the greatest ever Financial Advice expansion in the history of human civilisation in concert with the numeric demise of the most regulated and arguably most sophisticated Financial Advice market in the world.

We are of course referring to China and Australia.

2023 marks the 25^th anniversary of the AIOFP’s establishment by three independently owned practices and the current Directors want to make sure that the AIOFP is around for at least another 25 years to assist the Advice community. We therefore need to grow our membership base to maintain the level of service to members and to continue our advocacy role in Canberra.

The Australian Advice market is grossly over serviced with far too many Associations competing for market share where Adviser numbers have reduced by 50% in recent times, it is only a matter of time before more mergers and/or failures will eventuate.

The FPA/AFA merger is symptomatic of this ‘cutthroat’ environment, both need each other for different reasons, but at the end of the day it’s all about having sufficient capital to effectively operate over the long term.

Furthermore, gone are the days of Advisers maintaining multiple Association memberships. This trend, in conjunction with the abolition of the mandatory TPB conditions compelling Advisers to have Association membership, is further diminishing the available member capital pool for Associations to tap into.

Associations can no longer rest on past laurels or take for granted members ‘blindly’ joining, they need to demonstrate and justify their value proposition. The onus must also be on Advisers to perform some due diligence on whether an Association suits their needs based on past performance, too many Advisers have indiscriminately joined entities over the years without understanding who the Association is acting in the best interests of – thinking they are all generically positioned. This has proven to be a very costly assumption in political capital terms.

We see China as a commercial opportunity to grow member services in Australia by licensing our business model to our joint venture partners and receiving passive income to support our Australian operations.

The AIOFP objective is to remain independent of any mergers with other organisations that are not Financial Adviser centric. We recently rejected a merger proposal with an Accounting focussed Association, it was not the right fit at the right time – our focus is on supporting and protecting Financial Advisers best interests.

The China opportunity is mind boggling; their general middle class is over 700 million but the emerging middle class with money to invest is over 150 million in 2022. [source – Centre For Strategic & International Studies – CSIS – 2023]

During May 2020, the Chinese Financial Regulators announced policy changes that favoured new prospects for Wealth Management, Insurance and lending in China’s Greater Bay Area [GBA] – encompassing Hong Kong, Macau and 9 cities in the Guangdong province. COVID restrictions have slowed the spread to mainland China in the recent past, but it is happening. The massive emerging middle class wealth is demanding more sophisticated advice services to supplement the Insurance only approach by their 5.5 million strong Insurance Advice community.

In comparison, Australia have around 1,500 at best Risk only writers left!

Put yourself in a China based Insurance Advisers shoes. If your clients started demanding more than just insurance advice due to their increased wealth, what would you do if an opportunity arose where you could upskill and join a respected organisation in the independent space to service your client base?

We think many will take the opportunity, even if it is only 1%….that’s 55,000 members!

The AIOFP partner is the global insurance distributor Auto & General who established their China operations 6 years ago in Shanghai. In Australia A&G are Budget Direct, Compare the Pair and Qantas. They are using the AIOFP business model of an inclusive Association culture/training course/CFS designation to grow and upskill their distribution advice channel participants.

AIOFP’s [Australia] only ongoing role is to support promoting the brand with regular visits to attend functions. A&G staff in Beijing , Shanghai and Shenzhen are responsible for the day-to-day operations, it will not be a drag on the Australian operations.

The China market is over 90% female which is the opposite of Australia, an interesting demographic comparison. The 1970/80’s Australian Advice market was commission based which did not appeal to females preferring more secured income positions. In China, the males are encouraged to take the more secure income job route to support the family and females work in the commission world of Advice.

Since our March 12^th Shanghai launch other Asian countries with a similar insurance only Advice culture have approached us for information about our services – link to media coverage below.

https://m.yicai.com/video/101699893.html

The Asian opportunities are utterly enormous and the Australian Advice community will directly benefit from it.