A United Voice
The results of the AFA Board election ballots have just been announced (see: AFA Board Election Results…).
The new President, respected adviser and long-time AFA contributor, Marc Bineham, will work with a number of new faces on the AFA Board at a critical time in the evolution of the financial advice sector in this country.
The incoming Board will consist of members who hold a diverse range of opinions about the strategy the AFA should adopt in representing the future best interests of both its members and the public they serve.
The first critical challenge facing the new Board will be embracing the result of a membership vote on a resolution to be put to an Extraordinary General Meeting of the Association. This vote is set to take place just prior to the formal instalment of the new Board.
As most readers will be aware, the resolution to be put to the EGM relates to formalising opposition to the Life Insurance Framework reform legislation within the AFA’s Constitution.
Maintaining a voice to represent members at the ever-changing Government negotiating table is no easy task. But if the required 75% of members support the resolution to formalise opposition to the LIF legislation in the AFA’s Constitution, this would succeed only in marginalising the Association and destroying the well-earned influence it has achieved in Canberra in recent years.
The fact that an EGM is even being held to consider this resolution only serves to send a message to Canberra that the advice sector lacks unity of purpose at a time when the opposite should be the case.
Time and time again, it has been suggested there is no consumer benefit to be found in the LIF legislation. But there is – at least according to the politicians on both sides of the divide who have been framing remuneration reforms across the industry via both the FoFA and Life Insurance Framework reforms. For these politicians, it’s all about removing or restricting conflicted remuneration to ensure consumers receive better quality advice. This has become an imperative in Canberra since the fallout from the Global Financial Crisis began impacting Australian consumers who became the victims of inappropriate financial advice. Of course, this advice had absolutely nothing to do with life insurance, but all sectors of the advice spectrum have since come under the political and regulatory microscope.
It will be the vast majority of honourable advisers who will collectively and almost literally bear the financial brunt for the sins of a few, by way of becoming subject to legislation (strongly influenced by the findings of ASIC’s contentious Report 413) that will curb the maximum upfront commission an adviser may earn from the delivery of an appropriate, value-added life insurance product solution.
The current AFA Board is on record as opposing the proposed commission model that will eventually settle at 60/20. But had the AFA not had a seat at the negotiating table in Canberra, the outcome would have been worse for the honourable adviser. It certainly would not have been better.
I don’t subscribe to the argument that the AFA should have refused in principle to concede to the proposed LIF remuneration reforms. Had it done so, especially given the joint Coalition/Labor momentum applied to this consumer-driven demand for reform, the Association would have been rendered powerless and its voice would have become irrelevant, and this will happen if the EGM resolution is passed.
The diversity of opinion reflected in the make-up of the incoming AFA Board will clearly represent the spectrum of opinion held by its broader and rapidly expanding member base. This representation of opinion should satisfy AFA members who should now unite behind its new Board which in turn should unite in the challenges it will face on behalf of its members.
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