Your IndustryJul 22 2016

Join together for the best advice

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Join together for the best advice

People join clubs and associations to socialise, learn from like-minded people, and develop their own ideas and opportunities. Financial advisers are no different. Trade bodies exist as a way for advisers to come together as a community, bounce ideas off each other and stay updated with what is going on outside their individual practice. They can be particularly useful for advisers who are sole traders.

These organisations also provide a collective voice for advisers, and this solidarity through numbers should make campaigning to the regulator for change more effective.

Organisations such as the Association of Professional Advisers (Apfa), the Personal Finance Society (PFS), the Chartered Insurance Institute (CII), and Chartered Institute for Securities and Investment (CISI) exist to help advisers become better at what they do by providing training and qualifications, and to help clients get the best possible service.

A specialist approach

Others take a more specialist approach. The Investment Association (IA) and the Association of Investment Companies (AIC) are focused on open- and closed-ended fund structures, respectively, and provide extensive data to allow a more detailed comparison of products for advisers and investors alike.

However, involvement in these organisations comes at a cost. Membership fees can run into the hundreds, often with extra charges for added benefits, which may include qualification exams. Being part of multiple trade bodies means these costs can add up quickly.

Despite the fee, many advisers feel being a part of a trade body is invaluable to their careers due to the training and socialising opportunities they provide. If an adviser has taken the time to join a professional body then they have recognised the need to somehow advance their professional status and improve the work they do for their clients.

On the agenda

The primary motive behind trade bodies is to provide a community for advisers and give an opportunity for further education. Most host regular meetings to hold discussions on topical issues or have an online forum, while others provide a graduated qualification system so advisers can continue to progress their careers.

Francis Klonowski, principal of Leeds-based Klonowski & Co, says the educational aspect of trade bodies is one of the most beneficial aspects of membership. “In my case, financial planning was paramount in my business, so I naturally gravitated towards the IFP, now incorporated within the CISI.

“I also became a member of the American Financial Planning Association (AFPA), from whom I receive valuable information, guidance and tips. Not everything is relevant, but hardly a week goes by without finding something useful, especially on practice management issues. And they are so honoured whenever I contact them to ask a little more about something they have written,” Mr Klonowski says.

Although the task of trade bodies is not simply education alone, some advisers view them as a voice for the community to regulators, as well as making sure that all of the members are upholding a good service to clients and an honest practice.

All things to all people

Having a comprehensive view about what impacts advisers the most, and providing a means of addressing these problems, is also a key responsibility of trade bodies, according to Sarah Harragan, chartered and certified financial planner at Grangewood Financial Management in Essex.

“Trade bodies have a difficult task because they need to be many things to many people. They need to be our collective voice, so they really need to understand our issues and how best to address them. They need the power, force and magnitude to be able to make other authorities stand up and listen,” Ms Harragan says.

“They also need to ensure that all of the members have the greatest level of ethics and a high level of education, and encourage this to be an integral part of our roles, but also enable us to do this at a financially feasible level no matter what the size of the firm and their resources.”

Too many?

However, some argue that there are simply too many trade bodies in the industry to be effective. Rather than having a number of smaller bodies competing with each other for membership, it may be better to have fewer organisations with more members.

The Institute of Financial Planning (IFP) merged with the CISI during the second half of 2015 after research revealed that there was a 75 per cent overlap in the operations of the two bodies. This resulted in five regions of the new organisation becoming available to the former IFP members and all of the regions becoming available to CISI members.

These trade bodies are often too similar in nature to be necessary, and further streamlining could be help additional change in the industry more effectively, says Jeannie Boyle, technical director and chartered financial planner at EQ Investors.

“There are too many associations with blurred dividing lines, which often undermines their ability to achieve change. Last year’s IFP/CISI merger should in theory provide a stronger voice moving forward, but it is still early days,” Ms Boyle explains.

“Trade bodies should be lobbying the government and presenting policy proposals or objecting to those their members disagree with. They need to demonstrate that they are representing advisers, and are not happy to just take the membership fees and organise training events.”

But trade bodies might not always be so effective in lobbying, and are not always involved in the process. It may be difficult for the regulator to involve all trade bodies in the process, and would be unfair to choose some for input over others.

The Financial Advice Market Review (FAMR) was launched by the FCA in 2015 as a working group to examine how financial advice could be made to work better in the interests of consumers, but it does not have any representation from the CISI.

The surplus of trade bodies may also be harmful for clients, as many may not know the difference between the organisations, or would not be able to form an opinion about which they think are the most reliable or provide the most thorough training when choosing an adviser.

“The plethora of different qualifications from various different bodies cannot be easy for consumers to understand,” Ms Boyle says.

“Of all the trade bodies, the chartered CII status for firms and individual advisers is respected, and provides a reassuring seal of approval to consumers.”

You get what you pay for

Just as having too many trade bodies can make lobbying less effective, it can also complicate an adviser’s choice of which one to join. Membership fees add up quickly and there can often be a great deal of overlap in the roles of the trade bodies, so it is not cost- or time-efficient to join all of them.

Mr Klonowski says, “It is the best value for money in my annual expenditure. But do not be tempted to join all of them

– you will never be able to attend all of the events or read everything that comes through.

“It is probably best to treat it like anything else you buy for the business such as technology or financial planning programmes. In other words, consider first what your needs are and then choose the body that best fits.”

Although often expensive, memberships in trade bodies offer invaluable opportunities for advisers to advance their careers through networking with peers and training and certification. Many also hold events or provide material that counts towards an adviser’s mandatory continuing professional development (CPD) hours.

Grangewood’s Ms Harragan says, “For the bodies I am a member of, I think I generally get good value for money when you consider all the free CPD events that are available.

“When you start adding in costs for exams and conferences it can get pricey, but ultimately you need to weigh up the cost benefit on whether to undertake or attend events, which incur an extra cost.”

She suggested that it is best that each firm considers the type of work they undertake and who is their primary client base, and then use this to decide which best suits their needs.

“What is most beneficial for me won’t necessarily fit all others. They need to ensure their members benefit from being partnered with them, retaining conversations with us and surveys to meet our needs.”

It is up to advisers to push for an overhaul of their industry’s trade bodies, and it may be more effective to voice their opinions and improve existing organisations rather than launch new ones in an already saturated market.

Julia Faurschou is a reporter for Money Management’s sister title Investment Adviser