21st March 2011
IFAs- “done up like a Kipper
Not a day passes without concerns being expressed in the trade press about whether AIFA is doing what it says on the can all for the broader church of IFAs it represents in the lead up to RDR.
Panacea.com is a community made up mostly of smaller IFAs, we are not a trade organization, we are not a network, we are not transactional in any way. We do care passionately about the smaller IFA. We have engaged in successful political lobbying and we do our level best to ensure that our 3,000 plus members get access to the very best of industry information, education, intelligence and business ideas for free, in real time and in one place.
So, it was with some regret that I learn this week that all may not well within AIFA. If this is the case, I suspect that a great many of its members will be asking some very awkward questions and be wanting answers quickly.
Doug Johnstone, Chairman of Creative Benefit Solutions, is a person of the highest integrity, he is well respected and has over 45 years experience within the Pensions industry, largely in very senior executive positions. Doug was also a member of the AIFA RDR Working Group.
He and his firm have just resigned from AIFA because he disagrees strongly with their position made clear in submissions to the TSC that RDR had the wider support of its IFA membership. He believes that their implied position is not correct in two key areas, commissions and qualifications.
The RDR working group operates, we are told, under “Chatham House” rules, dissent is not warmly welcomed and the outcome of the working group was in Doug’s view largely ignored when preparing their TSC submission.
The picture painted by Doug is of an organization that does not take into account the views of its wider membership and it is disproportionally represented and influenced by those IFA firms that support the fee only approach.
He believes that AIFA should have canvassed the view of it’s membership to ensure a majority view prevailed in their TSC submission and despite assurances that they had canvassed opinion they have refused to provide him, an RDR Working Group member, with any supporting evidence.
Garry Heath commented, “It seems pointless for AIFA to instigate an RDR committee and then ignore its findings.Do AIFA’s main supporters have an agenda which is against the business interests of a large number of their members? They certainly do not represent the sector as a whole. The fact that any challenger to the current position is attacked in such a Stalinist manner is particularly worrying”.
Alan Lakey observed that “AIFA positions itself as the voice of the IFA market a position it monopolised until Adviser Alliance was formed in 2010.
The single matter which the entire adviser world is in agreement on is that the RDR proposals provide the biggest challenge to the industry since the inception of regulation in 1988.
It was of vital importance that AIFA should respond, and be seen to respond to its members concerns, rather than be viewed as arbitrary judge of what is best for them. AIFA is in grave danger of becoming yesterday’s organisation. A non-democratic body that pays lip service to its members views and then proceeds in whatever direction it determines as best. A bit like the FSA, in fact”.
Have AIFA “done IFAs up like a kipper”?
Please click here to see Doug’s letter of March 7th to Stephen Gay.
Click here to see Doug’s letter to Andrew Tyrie, chair of the TSC
Please click here to view Doug’s document asking “Does AIFA represent members views”?
Click here to read AIFA’s response in “Alarm goes off in the Kipper Smokehouse” update Then make your own mind up.
Comments (10)
This is based on personal experience of being appointed to AIFA's Longstop working group whilst Chris Cummings was still in post.
Only one meeting EVER took place on the subject and the meeting was arranged for a date I was on holiday!
Since that meeting, there has been no other meeting or discussion on the subject that I am aware of and there was no documented follow up that I am aware of including the issues agreed at the meeting (I could not attend).
Could it be as Simon Mansell implies that Networks would welcome many IFAs leaving the industry unable to sell their client banks so that by default, the network instead of getting 15=20% of renewals, they'd get 100% for doing diddly squat?
Phil Castle 22/03/2011 10:39
There are about 24 members of the RDR working party and there are around 16 members of the Council. Doug Johnstone was in a minority of one.
Having dealt with this person I can only say speaking in my own capacity that he is exactly the sort that brings financial advice into disrepute. He built his business on a high commission model and although he may have had 45 years experience in the industry it doesnt automatically make him a worthy or a good example. Trying to debate with him makes banging your head on the wall a worthwhile experience.
It isnt a matter of dissent being unwelcome I can assure you it is certainly not the case, but there are certain rules to be observed. Chatham House Rules are well known, not unique to AIFA and it is the proper way to proceed in any committee. Johnstones action was akin to leaving a turd in a swimming pool. Just not the done thing. It rather highlights his lack of ethics and morals.
He really is a prime example of that disparaged term dinosaur. I rather suspect hes past it. Bear in mind that most of his comments and submissions have been in a personal capacity rather than as a direct representative of his firm. I also suspect that the firm he founded is a very different animal today. Firstly they have a qualified accountant as MD and most of the board seem to be well qualified and thoroughly professional advisers.
It wouldnt surprise me at all if they were acutely embarrassed by Johnstones antics. Again speaking for myself he has done AIFA a real favour by leaving.
Harry Katz 22/03/2011 11:08
Phil Castle 22/03/2011 15:02
I have no wish to fall out with you Harry but I must say I am surprised at your vitriol and would suggest it is your comments that exceed the boundaries of good taste. I have read Dougs account and it seems to me that he goes out of his way to maintain a degree of civility which seems not to be shared! I'm sorry that you have such strong views but of course these views are insignificant compared to the anxiety suffered by those older IFAs about to have their livelihood destroyed by the views you "claim" to represents. The only thing that Dougs views have done is to ruffle a few committee feathers, whilst those same members seem oblivious to the financial destruction of many IFAs. I do not believe the 24 members on the RDR working party represent AIFA members or the 20 - 30% of IFAs directly impacted by the lack of grandfathering. AIFA even attempted to undermine those IFA efforts that brought RDR to the floor of the commons and dragged Hector Sants before the TSC. Im afraid Harry AIFA is seen by many as part of the problem and not the solution.
Simon Mansell 22/03/2011 15:21
I know that you are a perfectly intelligent person, who is quite capable of having a sensible debate. That doesnt mean that either you or I expect to agree with one another. However this is an attribute completely lacking in Johnstones case. You (being somewhat younger) probably have more patience than I; but then I have never suffered fools gladly. There is unfortunately a big discrepancy between reading his account and the reality of the situation.
I would also take issue with you regarding older advisers who are about to have their livelihoods destroyed. I am an older adviser. I would make three points.
1. If you have been active in the industry for over ten years it really shouldnt be beyond you to obtain the qualifications. There is no precipice we have known about this for about four years already and there is still another 20 months to go.
2. There are now two bodies who are offering work placed assessment. So are these people afraid of that too? If so one can only wonder if they truly are competent.
3. These older advisers have in most cases been operating for 15, 20 or more years. Are you telling me that they didnt take their own advice and that they dont have sufficient pension and investments to have a moderately comfortable retirement? If that is the case excuse me while I shake my head in exasperation.
Phil
Re the Longstop watch this space. You too have the facility to debate and not be entirely bone headed. You also have an ethical approach to all you do seemingly not shared by Johnstone.
Harry Katz 22/03/2011 17:07
Grandfathering is one such matter. I have been inundated with e-mails and other correspondence from individuals who support higher qualifications but are distrressed at the insanity of a cut-off point for experienced advisers. Others push the benefits of fee-based advice yet accept that consumers should have the choice and that, in many instances, commission is the preferable route.
AIFA has conspicuously failed to consult its members over an issue that affects their ability to trade. Also, the disingeuous viewpoint that grandfathering enables bank advisers to slip through the net, ignores the reality that many excellent IFAs came from the bancassurer route. It's actually the bank procedures and processes that are to blame, not necessarily the advisers.
Harry Katz seeks to defend the indefensible and, in truth, if there wasn't something for Harry to argue about he is likely to dig something up to fill his time.
In short, AIFA is losing members and Adviser Alliance (www.advisersalliance.co.uk) is gaining new members, often disaffected ex-AIFA members, who are looking for a body operated by advisers for advisers who not only know what's going on but are prepared to do something about it.
Alan Lakey 23/03/2011 14:14
Simon Mansell 04/04/2011 18:32
If they are serious then why do they insist on us doing what they say rather than what they do. At the moment the re-qualification is an offer we cannot refuse unless we go out of business yet they do not apply the same regime of examinations or very expensive assessments to the hierarchy at the FSA or their own staff. Equality therefore is ignored in the matter of RDR.
When Lord turner, Hector Sants, Sheila Nicholl, Peter Smith et al agree to take examinations to qualify them for the job they are doing then I will cease feeling a sense of deep injustice about being forced away from clients who need my time to do examinations or hugely expensive assessments which may be out of date as soon as they are taken. I do not know whether their experience is good enough for the job. Obviously those who appointed them thought so. My Clients appoint me and have the choice to go to a freshly qualified Chartered planner or whoever. Their preference is to deal with me.
What should be tested is our knowledge of where to find the relevant up to date advice for those specialist areas which may occur from time and for which last years examination or questions on regulation are irrelevant.
Frank Dennis 06/04/2011 12:17
Brian Hammond 08/04/2011 13:08
Phil Castle 20/04/2011 09:03
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