By Leo Bland A year after its birth the Association of Independent Financial Advisers (AIFA) now re...
By Leo Bland
A year after its birth the Association of Independent Financial Advisers (AIFA) now represents around two thirds of UK intermediaries.
Arguably a key advantage is its inclusion of networks, which have become an increasingly important part of the intermediary market over the past decade. One of the failings of AIFA's predecessor, the IFAA, was that it did not encompass the networks, although it did win popularity among members through its former chief executive Garry Heath looking to champion the cause of the small intermediary. The IFAA was wound up last year after its members voted to join AIFA.
The plethora of potentially representative bodies for brokers such as the IFAA, Life Insurance Association, and the Large Networks Association, fed through into the creation of AIFA.
It was felt, both by brokers and intermediary-led life offices, that a single voice for the IFA industry was required, particularly with the raft of imminent legislative changes that are going to impact directly as intermediary businesses, from the introduction of stakeholder to the setting up of the Financial Services Authority and a tougher regulatory regime.
Paul Smee, director general of AIFA, said the association now represents around 16,000 registered individuals out of the 23,000-25,000 registered IFAs in the market. The trade body is also supported by national IFAs such as Bradford & Bingley.
He said his approach to lobbying is to present the case and treat it as a debate, perhaps winning 50% of the argument, rather than being confrontational, making enemies of regulators and the Government and not winning influence.
One area where this approach has been successful was in the FSA's demands last year that FSAVC business be reviewed to look for potential mis-selling. AIFA managed to persuade the FSA to treat intermediaries less stringently in recognising that every piece of FSAVC business they advised on did not need to be reviewed.
One of the criticisms of the IFAA was that it took a confrontational approach to lobbying the Government and regulators, which although popular with much of the membership, was not particularly effective in terms of winning friends in high places.
David Shelton, head of marketing at Clerical Medical, believes AIFA has had a successful first year, especially in terms of lobbying.
He said: "The big advantage is AIFA is a single voice. I think this is the first time we have had that in the IFA sector and it is absolutely crucial. The important thing about it is that Paul Smee is very professional and has brought a lot to the role and he has been able to argue a case in a very objective way. The more intermediaries who sign with AIFA in the future the better."
AIFA has had a positive impact during its first year, particularly with less emotive lobbying on issues such as endowment mis-selling. The trade body took a less confrontational stance than arguably would have been taken by the IFAA in recognising there was a problem with endowments and looking for solutions. This contrasts with the IFAA's approach to the pensions mis-selling review, which looked to absolve intermediaries of liability and did not the help the IFA's cause with the Government, particularly with the advent of Labour in 1997. Smee's approach has been helped by his background in the Civil Service, working at the DTI between 1978 and 1988.
Alasdair Buchanan, head of communications at Scottish Life, said: "AIFA has a good, sound strategy and it has managed to achieve a coherent voice for the IFA market. This contrasts with the past where there was a degree of in-fighting between IFA representative bodies and if you are going in to lobby the Government and regulators the last thing you want to do is to appear to be fragmented."
But there are concerns AIFA's non-confrontational approach may be reducing its visibility to members. Robin Stoakley, client services director at Schroders, said: "We have not seen too much evidence that AIFA is being particularly vocal. We do not see it talked about at grass-roots level and we have not had any particular contact with them. Most unit trust companies would be willing to support some kind of IFA association that works in the interests of the industry. The key, from a fund management point of view, is in the past you have found that the IFA trade bodies have been supported by a broad church of intermediaries who are not investment specialists.
"They were perhaps more interested in areas such as mortgages and life and pensions products and investment came lower down the list."
Improvements to AIFA's operations that Smee is looking to introduce include more regular regional meetings for members to keep them in touch with what the trade body is doing for the IFA market.
One concern for the industry is there may be too many IFA organisations and one solution may be to merge AIFA with IFA Promotion. Shelton commented: "AIFA is also a very complementary organisation to IFA Promotion. IFA Promotion has a very clear and distinct role and that is about more and more people using independent financial advice. In the battles that need to be fought in the future, however, it is important the lobbying is done separately from the promotion role.
"If you have a promotional organisation, that is about getting the public to use IFAs: that is a very clear objective.
"AIFA is looking to objectively try and present the IFA's case to government and regulators. The style and approach taken to lobbying is different to promotion. Some people in the industry are talking about bringing AIFA and IFA Promotion together but I am doubtful over whether that would be the best thing to do.
"If one is involved in lobbying Government or the regu
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