So 2013 is drawing to a close and the Christmas cards are starting to arrive. Universities and schools are drawing the term to an end and we are all hoping that the winter break isn’t too cold and that our boilers don’t give up under the pressure of winter, just when there is a house full of guests. Sadly, one of the changes for 2014 is the representation of IFAs and investors by IFA Centre. It is the only obvious advocate for independent financial advice, which has had to scale back due to a lack of support from IFAs in Britain. This is a real shame as Gill Cardy who in 2011 formed (the not-for-profit membership organisation) and runs it has worked hard to promote the importance of independent advice and championed causes to help investors receive fair treatment when they have been royally fleeced. This is the sort of change that the financial services industry has been crying out for and sadly it will not continue in the way it was hoped. The IFA Centre, of which I am a member isn’t closing completely, but will now focus on providing resources, events and other benefits to firms like ours. This will still be of benefit, but I greatly appreciated the work that Gill was doing in making representation for IFAs. Sadly, this does not seem to be of sufficient interest to enough advisers. I’m hoping that this isn’t simply an appalling attitude of not being bothered by the majority of IFA firms, but rather a “not knowing what you’ve got until it’s gone” situation.
Gill said “After over 2 years of personal and financial commitment IFA Centre’s membership does not provide the financial resources for my full time commitment to protecting advisers’ interests, let alone the resources to provide research, policy development and a member events programme. Worse, irrespective of our funding, with so few firms prepared to stand together to improve how our businesses are regulated, I simply do not have enough members to provide the decisive mandate needed to provide the representation that Independent advisers so badly need.”
She added : “IFA Centre was only launched because so many IFAs were unhappy with existing representation and told me how important trade bodies with knowledgeable, experienced and passionate leadership are. However, many of these advisers have not joined and I am forced to review what services IFA Centre can continue to provide to IFAs”.
Public thank you to IFA Centre
Anyway I would like to thank Gill for all the hard work she has done to promote and further the benefits of impartial independent financial advice and attempts to restore some credibility and trust in a largely untrusted sector. Our clients benefit from independent advice and I wish everyone else’s did too… sadly they don’t.
Dominic Thomas: Solomons IFA
When 1 + 1 = €!!!!…. now that is leverage!
There is something very “Orwellian” about a story that was brought to my attention. This is yet another story of poor management and a dreadful lack of attention to contractual detail. Doctors in Ireland are said to be “angry” by the severance package agreed with the former CEO of the Irish Medical Organisation. It would appear that the former CEO is retiring after 30 years of service, a little early. Now don’t get me wrong, I have no idea if Mr McNeice has done a good job or a fantastic job, but for a relatively small organisation his settlement does seem somewhat large. The 2011 annual accounts for the IMO report an income of €3.8m and around €6m of balance sheet assets. So it may come as a surprise that Mr McNeice has a package of €20m+, which has forced the IMO into negotiations with him. The IMO is meant to be a doctors union, to represent them. This package dwarfs Fred Goodwin’s when you consider the money on the table.
That thing… risk and reward
I don’t have a problem with people earning large sums of money, (at least I think I don’t). We need entrepreneurs to create jobs and wealth. However this is invariably linked to risk – the prospect of losing all of an investment into a business venture. Good entrepreneurs can reduce risk through skill and knowledge and looking for the predictable that others cannot see. I’m not convinced that a union really falls into this category. Whilst the job may be difficult (I simply don’t know) I find it hard to understand why someone is remunerated in quite this way.
Are you being served?
The IMO had a 2011 membership of 5,339 (a 13% reduction on the previous year from 6,143) these members subscribe to be represented (see the latest fees here) which generates about 95% of all of the income for the IMO. There are only 24 employed staff. This is a small organisation. The 2011 staff bill was €2.1m which includes pension contributions. That’s an average of €87,500 per member of staff and of course I suspect that most of the 24 are paid considerably less than this. Little wonder that the parting €4.5m pension fund, €1.5m termination payment and further deferred payments taking his package to over €20m. One wonders what the staff feel about their former CEO now.
Play to your strengths
So Irish doctors are somewhat livid, as you might imagine. Indeed without a re-negotiation and increased fees, the organisation must surely make the remaining staff redundant and close its doors. A very sorry tale indeed. However this is a clear reminder to all that paying attention to the numbers is vital, frankly those on the Board either lack the experience or knowledge to see the wood for the trees, which is understandable if they are trained doctors, why should they also be experts in finance? As has been repeated many times before – play to your strengths. If you spend all your life working on your weaknesses, all you end up with is a stronger set of weaknesses.This is why successful business people and professionals come to me for advice. Not because they can’t plan or don’t understand money, but because it really is not their strength – and frankly the vast majority are not interested in “money”. They delegate this stuff to me. Its my job to do the numbers, however this prompts a vital question about trust and control, which of course is a question that only my clients can really answer for themselves.
As for the IMO and its parting CEO to quote “Tough decisions need to be taken… ” and many other words that come back to bite.