Too many financial services groups spoil the broth

Mike Taylor warns about the large number of industry bodies in financial services, focusing on AIOFP.

The Australian financial planning industry is arguably over-endowed with organisations purporting to represent the interests of financial planners.

Just dealing with the mainstream and semi-mainstream there is the Financial Planning Association, the Association of Financial Advisers, the Boutique Financial Planning Principals Group and the Association of Independently Owned Financial Planners (AIOFP).

To exist, to deliver services to the industry and to pay salaries, each of these organisations must levy membership fees or in some other way seek to leverage the sale of products and services.

Educational courses and seminars are common. Equally, such organisations frequently negotiate and offer group discounts and other benefits to both maintain and entice members.

This is what makes the AIOFP exceptional. As events around Trio Capital/Astarra have shown, the AIOFP appears to have gone beyond the conventional in terms of dealing with the relative exposure of its members.

Not surprisingly, this has given rise to suggestions that the AIOFP is not an industry organisation in the traditional sense.

These suggestions have gained momentum amid the personal involvement of the AIOFP’s chief executive, Peter Johnston, who is trying to locate the funds reported to be missing from the Astarra Strategic Fund.

While some might laud Johnston’s efforts on behalf of AIOFP members and their clients, others have questioned his need to do so — hardly surprising when the AIOFP’s own website says that it has acted as a “consolidated distribution network to qualify for rebates from certain fund managers/platform operators for our members”.

There are no hard and fast rules about what industry bodies can and cannot do, but there are accepted norms and the Australian Taxation Office has some very firm views about their tax status, how such groups derive income and how their officers are remunerated.

In the end, industry organisations rise or fall on the basis of whether they can attract and retain the support of members. On the available evidence, the AIOFP has a core of very supportive members and Johnston is working hard to maintain that support.