What becomes of the broken-hearted?

Friday, May 11th 2007, 7:54AM

Well, well, well. So the four associations representing financial advisers can't work together to make a single regulatory body for their members.

As readers of Good Returns will know the idea of a pan-industry APB created by the four financial advisory associations has fallen apart.

Three groups, the Professional Advisers Association (PAA), the Society of Independent Financial Advisers (SiFA) and the Life Brokers Association (LBA), have agreed to work together to form an APB. Meanwhile the Institute of Financial Advisers is out on its own.

In some ways I'm not surprised with the turn of events this week. While the public comments over the months have all been about the associations working together to form one APB, there has been an under-current running through things.

The undercurrent being that the IFA - the biggest of the four - was holding an ace card. As the biggest the others would have to do what it said. That is what the lead story in ASSET two months ago was saying.

My observation now, after talking to one side and reading the comments of the other, is that the IFA's end-game was that it would be the APB and everyone else would have to join up to them.

IFA president Simon Hassan admits as much in his comments today.

This seems to be totally contrary to what has been said previously. The common wisdom previously has been that there should be a separation between the joint APB and industry associations.

Not so apparently. Now, according to the IFA, it's the PAA's fault for wanting to lift its game and prepare for regulation.
I would have thought that competition and another organisation seeking to lift the professionalism of advisers was a major plus for all concerned.

The other argument, and one which makes me chuckle, is this looking-down-the-nose at associations who provide membership benefits. Hello. Is being professional and providing member benefits mutually exclusive?
I don't think so - ask the Institute of Chartered Accountants.

Ask members what they want? Do they want to get something tangible for their membership, as well as the values and professionalism?
You bet. Does someone want to pay hundreds of dollars a year just so they can hang a certificate on the wall? I don't think so.

Maybe there is an argument that big and powerful organisations should be using their strength to get benefits for their members. Take this further and one could argue that these sorts of organisations are in fact letting their members down. (Just a random thought - as my children would say!).

This argument is a new incarnation of something that has been around for ages, investment advisers looking at risk advisers as second class citizens.

Sitting here today it appears that the IFA is playing a high-risk game. Will it win the hand and score the big win?

Hard one to back. If an adviser can join a low-cost APB which provides the necessities to practice and is competency based, and can belong to an association which offers significant benefits which have cash benefits I would suggest that's a strong offering.

My analogy here is to look at what has happened in the airline industry with the growth of low-cost, no frills operators.

One difference though is that combined the G3 are far stronger financially than the IFA.

I thought in this move to professionalism that all the egos had been packed into bags and shipped off. Yeah right.

Do you agree or disagree? Send your comments to blog@goodreturns.co.nz

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