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Single advisory body still possible

With only days left to the IAFP special general meeting showdown Philip Macalister backgrounds the key issues.

Monday, December 15th 1997, 12:00AM

by Philip Macalister

Believe it or not it is still possible that a single advisory body, which satisfies most people's interests, will come out of the stalled merger talks.
After all the Insurance and Investment Advisers Association (IIAA) appears pretty united, it's the Association of Investment Advisers and Financial Planners (IAFP) who are having an internal revolution.
The situation at present is that the IIAA withdrew from the talks, as IAFP's negotiating team wanted to renegotiate the package which members of both organisations agreed to in July.

The IAFP is arguing within itself about who has done what and how well they did it. Cutting aside all the allegations, egos and personality-driven arguments, the bottom line, from an IAFP perspective, is protecting the Certified Financial Planner (CFP) mark.
"Without CFP the whole thing falls apart," IAFP chairman Rodger Spiller says.
The CFP Board of Standards, which licenses the IAFP to use the CFP mark, outlined its four minimum requirements in a fax to IAFP chairman Rodger Spiller recently. It said:
  • The CFP mark be recognised and accepted as the pre-eminent mark in any merged association, ie: that CLU is acceptable, but only as a subsidiary mark and not "equal" to the CFP mark.
  • Financial planning be recognised and accepted as the overriding professional discipline within the new association and that the insurance sector be recognised as a discipline under the financial planning umbrella in which all members would practice.
  • The name of the new association should include the words "financial planning" and reflect the primary focus on this professional discipline.
  • That as the license holder of the CFP mark in New Zealand, it is the elected officials of the IAFP or any other persons they appoint who should be charged with the responsibility to negotiate the terms of any proposed merger within the terms noted above.
While those may appear to make a compromise deal near impossible to achieve, there is hope that it can be done.
As four IAFP board members, Alan Anderson, Phillip Matthews. Christine Winter and Denys Wright, point out in their fax to members these requirements should be regarded "only as stakes in the ground."
The IIAA is likely to be the least happy about the CFP's position, yet president Ian Clark is pretty relaxed about them.
The IIAA is prepared to re-enter negotiations with the IAFP, he says.
"We are ready and willing to go back to the table. We haven't closed the door."
Of the four points raised by the Board of Standards only one caused Clark any concern. That is the first point which specified that CFP would have to be the pre-eminent mark of any merged association and that CLU is only acceptable as a subsidiary mark.
"I'm not comfortable with that," Clark says.
He doubts that CLU is treated in such a way in the United States and he also points out that it takes a lot longer and requires much more work for an adviser to gain CLU status than it does for a planner to achieve CFP status.
To date there are 21 CLUs in New Zealand.
Clark isn't too concerned about the requirement that financial planning be recognised as the over-riding professional discipline within a merged association.
From his perspective it is fairly semantic as true financial planning as such isn't widely practised in New Zealand, although there is a trend for advisers in the two disciplines to work more closely together and build strategic alliances.
The request to include the expression financial planning in the merged body's name is not a major issue either.
Clark says the rationale for selecting the New Zealand Association of Financial Advisers was simply to reduce the number of issues which could be contentious.
By putting financial planning into the name may appear to favour one party over another.
"If we had to use financial planning to met the needs of the international body, then I don't think that would have any long term effect on members."
Clark says the important thing is to finalise the negotiations so the associations can then put a proposal to members for sanctioning.
He hopes any proposal will be "in the best interests of our association and the industry as a whole."
It is imperative emotions and personal egos are put aside and members of both associations address the big issues.
While the IAFP has been fighting amongst itself over the matter both associations have been continuing work on the proposal.
Clark says a code of ethics has been completed and signed off by both associations. The by-laws and disciplinary procedures "should be completed before Christmas."
The crunch point is who is the IIAA prepared to talk to?
Clark clearly wasn't keen on trying to influence the upcoming IAFP special meeting. He says the IIAA would be prepared to talk with Spiller and IAFP deputy chairman Mark Hubber, however for these two to continue they would have to have a specific mandate from the IAFP.
If Spiller and Hubber were to return to the talks and pursue the position that led to the IIAA withdrawing from negotiations then there would be no point getting back together.
"If the SGM met, re-endorsed Rodger and Mark and wanted them to renegotiate the whole document then nothing has changed," he says. Negotiations would be off.
Clark says the critical thing for the SGM is that IAFP members "agree on the direction they are going to take with the Joint Working Party and the document which goes back to members."
While there have been numerous allegations about the management of the IAFP board, it is clear there are fundamental problems. The eight members are split into two even sized camps, which means the chairman has to use his casting vote.
Both camps within the board are sending out their own material to members and those recipients are getting confused and bewildered.
Good Returns is going to leave it up to individuals to judge how well the board has been managed.
The IAFP SGM is to be held in the Chart Room, James Cook Centra Hotel, Wellington on Thursday December 18, starting at 11am.
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