When the country’s two peak financial advice associations asked members if they wanted a merger last month, the answer was resounding: More than 95 per cent from each base voted in favour. It was well more support than the three-quarters of eligible members needed for the union to proceed.
Feedback from members of both the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) suggested the groups were increasingly fighting similar battles and advocating for similar issues, at a time where the profession’s numbers are dwindling and advisers are being crunched by costs.
It’s hoped the new Financial Advice Association of Australia will be able to advocate for advisers’ interests on matters like the implementation of the Quality of Advice Review and the next stages of education and professional standards.
In light of the merger, we look at how AFA and FPA membership numbers have changed over time – and where they sit now.
What the numbers show
Historically, the FPA has had a larger membership base than the AFA. When the industry’s numbers were near their peak at the end of 2018, the FPA had just shy of 9500 members (36 per cent of advisers), while the AFA had just over 2700 (9 per cent of advisers). At the time, about 1 per cent of advisers were members of both associations.
Figure 1 – Then and now: Number of advisers with AFA and/or FPA memberships
Source: Adviser Ratings, ASIC Financial advisers register.
As the profession’s numbers dropped, so did the associations’ numbers, but at a slower pace than overall industry exits. At the end of last year, the FPA had fewer than 7000 members, while the AFA had fewer than 1800.
In other words, both associations have grown their membership base as a proportion of overall adviser numbers. This month, more than half of all advisers (56 per cent) are members of at least one of the two associations, compared with 47 per cent in 2018.
Figure 2 – Percentage of current advisers with FPA and AFA membership
Source: Adviser Ratings, ASIC Financial advisers register.
There are a few things that may explain this. Advisers who are members of an association may be more committed to staying in the profession, while changes to professional standards and the advice industry at large may have persuaded advisers to hold onto their membership or join an association.
With Adviser Ratings data showing the number of advisers now well below 16,000, the new Financial Adviser Association of Australia has set a mandate to grow the profession. Earlier this year, FPA CEO Sarah Abood told us she’d like to see numbers exceed the peak of 28,000. We’ll be watching closely.
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Comments6
"I keep thinking of the words of Sir Walter Scott: "oh what a tangled web we weave…." The whole FAA concept in my view will ultimately implode on itself. I can understand the attraction to it for some advisers, particularly the less experienced who don't carry battle scars from the past, but the cultures of the AFA and the FPA have always been miles apart. I have frequently expressed that view to the AFA, in that I believe that risk specialists in particular will basically be sacrificed on the altar of expediency in the new FAA. I've been acknowledged, then ignored . C'est la vie! I note John Carberry's comment above about the need for effective lobbying. I would add to that that the lobbying also has to be professional – we need to engage a professional lobby firm with connections to the government of the day, and pay fees accordingly, funded if necessary by an additional adviser member levy. What the FPA and the AFA have done in the past is not effective lovely lobbying – and as I said to the AFA on many occasions, we should mirror what the AMA does, which is to act for members first and leave the consumer ideology to the salaried ex-lawyers who populate those organisations. And firing off 30 page submissions to ministers who feel befuddled after reading a one-page briefing (I used to write them, so I know) just clogs up the wastepaper bins. And let's the Minister for both representations by passing it on to his department, for a very slow policy consideration. And every time I hear that line trotted out on occasions by someone pushing amalgamations, that we need to all talk with one voice to government, I recognise a tried and true defensive mechanism utilised by any politician with any brains – "why don't you all talk with one voice" , when the politician knows full well that that would never happen. I think Julius Caesar called it "divide and conquer""
Bill Brown 11:17 on 23 Mar 23
"I happily remain a non-member, was a member once upon a time time but resigned due to complete lack of value. FPA completely failed over the years to be a successfully lobby group and adequately represent members interests. Final straw being the woeful representation at the Royal Commission. Go and review their annual reports and financial statements from 2015 - 2018 and one will observe more than 50% of their revenue was derived from "Corporate Sponsorship" income and course fees for a 'licensed' designation that not even the Govt was prepared to recognise. Muppets. If you wish to benchmark membership percentages and the relative power and success of groups representing 'their members' , then you should compare the 'APAA' with the equivalent in other professions, e.g. Pharmacy Guild of Australia, Australian Medical Association, CPA Australia, even the Mortgage Brokers, who've seemed to have done quite a good job representing 'their members.' "
John Zee 16:40 on 22 Mar 23
"8,800 Advisers remaining as a joint tally, should be sending alarm bells ringing and a clear indication that the current system of retention and recruitment to meet Australians needs is not working. Historically, most Advisers entered the Industry from outside todays pushed / preferred pathway via the University degree, yellow brick road entrance and if we look at how many new Advisers have decided on a career in Wealth Protection and compared that to how many vastly experienced Advisers who have left, it is a sad reflection of how people with little understanding and less care, plus vested interest groups who only think of themselves, have caused Billions of dollars damage and ruined countless people's lives, to end up with the situation where they still think the current path is the right way, which clearly, IT IS NOT. Australia needs a minimum 20,000 specialist risk Advisers to be able to cope with demand, plus 20,000 Investment specialist Financial Planners, though even today, the numbers are dropping and will continue to drop as more Advisers leave and retire. The new Association needs to recognise that the past and current recommendations are failing, as it is too hard to start in the Industry as a risk / wealth protection Adviser and this needs to be changed so the pathway is not the current maze that deters rather than encourages new people to join and then, with the common sense/real world solution of testing the waters and seeing how the Industry actually works, they can be earning an income, build upon their skills and then undertake further education if they wish to move towards full Financial Planning. For those that disagree with what I have said, please provide a better solution that takes into account what people want, rather than what is currently being rammed down their throats and clearly not working."
Jeremy Wright 16:40 on 22 Mar 23
"The challenge for the AFAA is to be an effective lobby group with both the Government and opposition. The AFAA probably need to hire or outsource this expertise as it is critical to lobby Government on both sides for better long-term outcomes for the whole industry."
John Carberry 16:01 on 22 Mar 23
"And given that it is a requirement that all advisers belong to an industry body begs the question what the other 47% are doing"
Matt 15:24 on 22 Mar 23
""statistics if sufficiently tortured will confess to anything"..........I don't think that just over half of the remaining concentrated advisor body being members of industry professional associations is a ringing endorsement for advocacy. Remembering of course that CFP's are captive to retain their endorsement. "
Alan 15:05 on 22 Mar 23