We explore the reasons behind the merger of the largest two industry bodies in the financial advice industry.
In late February, a large majority of members of both the Association of Financial Advisers (AFA) and Financial Planning Association (FPA), the largest two industry bodies in the financial advice industry, voted to merge.
The merger, first announced in September last year, will see the creation of a new industry body for advisers, the Financial Advice Association of Australia (FAAA). The new organisation will commence in April, with a transition period for members, the existing boards of the two associations, and new branding to come into play before June.1 The two industry bodies combined are expected to represent around 13,000 financial advisers.2
Below, we explore the reasons behind the merger and how the new organisation hopes to change public representation of the advice industry.
Why are the AFA and FPA merging?
Following the announcement of the merger last year, FPA Chief Executive Sarah Abood said the decision had been driven by member demand, as well as financial considerations as the number of financial advisers in the industry shrinks.
“We've been approached on both sides by members at those events to suggest that they love to see us working together, and they would really like to see us pursue a merger,” Ms Abood said.
“It has made us on both sides, I think, think really deeply about what is the best way to use members' funds and how can we ensure that our members are going to continue to be represented effectively."3
New association name
The two industry bodies decided on the new name of the ‘Financial Advice Association of Australia’ after consulting with around 500 members.
“We received strong and consistent feedback that the name for the merged association should be simple, reflect professionalism, honour the heritage of both organisations, and promote unity. It should also make clear the role the organisation will play in supporting financial advisers and planners,” AFA President Sam Perera said in a statement in early February.
The industry body’s Chief Executive, Phil Anderson, said the name was also chosen to be inclusive to all professionals working in the financial advice space, not just advisers.
“I think that it is all about financial advisers, but let’s not lose context to the fact that we also want to appeal to paraplanners. We want to appeal to other people who work in the advice profession,” Mr Anderson told industry publication IFA.
“But I think there’s no question that financial advisers are at the core of the reason for this association to exist, but it is more broadly about the financial advice profession."4
Who will lead the new body?
The two associations revealed when the merger was announced in September 2022 that current FPA Chief Executive Sarah Abood would continue to lead the merged body, with current AFA Chief Executive Phil Anderson to become General Manager responsible for the transition period.
A joint transition board will be named to lead the organisation until 2025, with eight board members and a board chair from the FPA, and four board members and a deputy chair from the AFA.
What does this mean for advisers?
The newly formed FAAA hopes it will be a better and more powerful political advocate for the financial advice industry, according to AFA President Sam Perera.
“Coming together will no doubt strengthen our voice to stakeholders and significantly increase the likelihood of achieving crucial advocacy positions, which is vitally important to members of both organisations,” Mr Perera said when announcing the merger last year.5
With just under 16,000 licensed advisers in the industry as of November last year,6 the FAAA will represent the vast majority of advice professionals as it seeks to form a consensus on policy issues.
Ms Abood said advocacy will be a key priority for the organisation as it moves forward to the transition period2, and as the government moves to finalise consultations on the proposals in the Quality of Advice report, this could be particularly timely for the future of financial advice regulation.
1 AFA/FPA merger confirmed. Risk Info, 28 February 2023
2 'We worked bloody hard': FPA/AFA merger gains overwhelming support. Professional Planner, 28 February 2023
3 FPA to gather with members following vote to merge with AFA. IFA, 19 September 2022
4 AFA CEO addresses controversy aimed at proposed merged association's name. IFA, 14 February 2023
5 It's happening: FPA, AFA exploring merger - Professional Planner, 1 September 2022
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