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New independent financial advisors association launched

14 March 2011 National Association of Independent Financial Advisors (NAIFA)

During the past week, board members of the recently formed National Association of Independent Financial Advisors (NAIFA) conducted a road show to introduce the association to the Independent Financial Advisors (IFA’s) countrywide. “NAIFA was created out of the need for IFA’s to have their voices heard and for demonstrable actions undertaken on their part to bring about greater certainty about their future” said Mark Galbraith, the chairman of the Association. “The reception we received and the enthusiasm with which IFA’s have offered their support to our collective mission has been overwhelming” says Tracy Devonport, director and well known IFA.

The IFA finds himself at a crossroads in these times, due to uncertainty regarding the future of the financial advisory services industry. NAIFA has identified the root causes of the current dilemma as being, in part:

- a lack of transparency in respect of final regulatory objectives and a number of other issues in relation to IFA’s relationship with the Financial Services Board, which creates unnecessary tension and negates effective communication;

- divergent agendas between product providers and IFA’s, with IFA’s questioning the need for complex financial products where simple ones would suffice;

- sustained unfair negative publicity regarding the role of the IFA in the rendering of financial services and the fact that commission payments have been made the scapegoat to cover a multitude of other problems in the industry, which creates an unjustified image of the IFA as someone who earns more that other hardworking persons; and

- apathy amongst the ranks of the IFA, which leads to problem not being addressed until they reach a critical stage.

“A critical stage has been reached in financial services and assertive action is needed to protect the interests of IFA’s and more importantly the clients they serve. The unabated rate of regulation could have a severe impact on the economy by year-end, and as many as 370000 jobs could be lost if certain trends persist. Millions of consumers would be left with no recourse to other assistance than through call centres. Only then, will consumers realize the true value of the IFA – but by then it may be too late” says Chris van der Walt, director of NAIFA.

NAIFA will endeavour to address the concerns of its members by always measuring the good that its actions will bring to consumers. To this end, NAIFA proposes to engage consumer bodies to clarify the valuable role of the IFA and to dispel many of the negative perceptions that consumers may have.

NAIFA has circulated a petition for IFA’s to sign if they agree with its objectives. The petition calls for the establishment of an oversight committee where IFA’s could lodge grievances by reference to the content and manner of enforcement of the Financial Advisory and Intermediary Services Act – the industry’s primary regulation. Many problems with this regulation have been experienced since its inception and the perception amongst IFA’s is that many of their legitimate concerns are simply ignored.

For more information on NAIFA and how one can join the organization, please log onto the website at http://www.naifa.co.za/
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