Sam Perera

Members of the Association of Financial Advisers (AFA) and Financial Planning Association of Australia (FPA) have voted in favour of the proposed merger of the two associations at Extraordinary General Meetings (EGMs) in Sydney yesterday. 

Across all resolutions, an average of 96.5 per cent of AFA votes and 96.7 per cent of FPA votes were in favour.  The merger proposal required 75 per cent of the votes cast by eligible voting members to be in favour of the merger in order for it to proceed.

Sam Perera, president of the AFA, said the result showed overwhelming support by members for a merger. 

“A merged association gives us a united voice at a crucial turning point for our profession, including the proposed changes from the Quality of Advice review.   

“Our members have recognised the importance of having a strong, single voice representing them to government, regulators and other stakeholders 

“During our discussions in recent months with members, it was clear that there was significant support for a merger, but we never took this for granted and recognised the importance of members having their say,” he said. 

David Sharpe, chair of the FPA, added that both the AFA and FPA boards were unanimously in support of a merger since it was first proposed to members in September 2022. 

“The boards developed the proposal as they believed a merger for the two associations was in the best interests of all members, and of the financial planning and advice profession as a whole.   We saw substantial benefits from a merger, and it is clear from the vote that the vast majority of members also recognise these benefits. 

“This is a historic day. We are coming together at a critical time, when we have a real opportunity to drive much-needed change to strengthen and grow the profession of financial advice. I want to thank all members of the AFA and FPA who have engaged with us, asked many great questions along the way and taken the time to make their voices heard. You have put your trust in us to create a larger and stronger association to represent you, and we will be doing our utmost to deliver. 

“There has been a great deal of work going on since the proposal was first put forward, and we are now in a strong position to move ahead with formally establishing the merged association.” 

The full legal name of the new association will be the Financial Advice Association of Australia Limited.   

Legal completion is expected to take place on 3 April 2023 and a transition period will run from April to June, including adoption of the new name and constitution, finalising and launching a new brand and logo, new board formation, and membership transition.  The transition is expected to be complete by 1 July 2023. 

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David Sharpe

The Financial Planning Association of Australia (FPA) and the Association of Financial Advisers (AFA) have agreed in principle to explore a merger between the two associations, with a goal of creating a united voice for the financial advice profession.

The boards of the two associations have signed a Memorandum of Understanding and will seek feedback from their members before inviting them to vote on the proposal.

After the period of consultation, it is expected that members of both associations will vote on the proposal by the end of this calendar year.

The FPA and AFA boards believe there are substantial synergies and other benefits for their respective members from a merger, providing a united voice and stronger advocacy for financial planners and advisers.

David Sharpe, chair of the FPA, says that in recent years, the AFA and FPA have worked closely together in advocacy, often making joint submissions on policy.

“Effective advocacy is consistently the number one priority for members of both associations and a merger of the FPA and AFA would create a single association which would speak for the profession.

“By creating a unified voice, the merged association would add clarity and power to the positions it takes and avoid duplication of activity and erosion of its messages. It also increases the likelihood of achieving crucial advocacy positions,” he said.

Sam Perera, National President of the AFA, says any merged association would honour the heritage of both the FPA and AFA, in particular recognising the AFA’s 76-year history.

“The AFA has a strong background in representing members from diverse groups and this would continue within any new association.  The Memorandum of Understanding aims to safeguard the interests of members and includes the AFA nominating four directors on the transitional 12 person board.”

The FPA and AFA boards have proposed that the CFP designation be the primary designation of the merged association.  The Fellow Chartered Financial Practitioner (FChFP) and the Chartered Life Practitioner (ChLP) designations previously offered by the AFA would continue to be recognised and supported (although not available to new applicants).

Members of each association will be invited to webinars in the coming days to hear more about the proposal, ask questions and provide feedback on the proposal. In addition, FPA members will be able to attend the AFA Conference on 21-23 September at member rates, and AFA members can attend the November FPA Congress at member rates.  A joint session of the AFA and FPA will be held at the AFA Conference.

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The FPA and the AFA have worked closely together advocating for this outcome with senior leadership at ASIC and APRA. APRA’s decision is a great result for consumers and protects them from a number of unintended negative consequences.

The measure was part of a planned package focused on improving the sustainability of the IDII market. The arrangement would have seen new income insurance contracts from October 2022 capped at a maximum term of five years, rather than being guaranteed renewable – typically until the retirement age of the policyholder – as is presently the case.

While policyholders would have had the option to re-apply for cover, the risk is that new contract terms and conditions may have changed, and policyholders would be underwritten again based on possibly changed income, occupation and pastimes.

The measure would have had a number of unintended negative consequences for Australians, including:

• missing communications from their insurer or not acting on them in time, resulting in cover being lost inadvertently
• leaving those with a changed situation at the time of renewal in a worse position, particularly those who have become pregnant, lost their job, or be experiencing income fluctuations (such as small business owners)
• creating uncertainty for those who may be on a claim when five-year term expires
• potentially triggering sharply increasing premiums for those left ‘stranded’ in older, closed products (if they had experienced adverse changes in health or other factors that may have left them unable to obtain cover in new products).

A number of other IDII measures have already been implemented that should have a positive impact on viability for these products, including changes to ensure benefits are now based on income at time of claim. We believe more time is needed to assess the impact of these changes on the overall sustainability of the market.

We look forward to continuing to engage with regulators and insurers to ensure that consumers have access to high quality and reasonably priced insurance that protects them and their families in their time of need.

By Sarah Abood, FPA CEO and Phil Anderson, AFA CEO

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Phil Kewin

The Association of Financial Advisers (AFA) and the Financial Planning Association of Australia (FPA) have teamed up to form a Life Insurance Task Force, two years out from ASIC’s review of the Life Insurance Framework (LIF).

AFA CEO, Philip Kewin, said the task force has been set up in order to have a combined association approach to the future of life insurance and the ultimate objective is to arrive at a life insurance industry that delivers the best possible outcomes for consumers.

“We believe it is very important to have a united and consistent message from the advice community about the future of life insurance, that we can share with Government and the regulators,” he said. “This will also allow us to work collaboratively as a community with Government, towards the shared goal of great outcomes for consumers.”

The task force will be made up of two senior representatives of the AFA, two senior representatives of the FPA and four advisers – two from each association.

A key focus of the task force will be helping to improve the general understanding of the role financial advice plays in improving insurance outcomes for consumers and the importance of offering them choice in how they pay for that advice. “The aim is to create greater understanding of financial advice, the role of advisers and how life insurance commissions offer consumers an affordable way to access life insurance advice,” Mr Kewin said.

The task force will also report back to advisers with a common view on what will be required of them after ASIC’s 2021 review of the industry.

FPA CEO Dante De Gori CFP said, “The FPA and AFA collectively represent many, many thousands of financial planning professionals, who in turn serve millions of Australians who care about life insurance. So, as a united taskforce we can make an impact for well-considered, positive change much more effectively.”

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