FPA to post $2 million loss
TheFinancial Planning Association(FPA) will post its first end of financial year operating loss this year, with an expected $2 million deficit for 2004, due to a fall in education revenue and a lower than expected surplus from last year’s annual conference.
According to the FPA it is the first time the association has posted a deficit in its 11 year history with the $2 million deficit split between an actual loss of $1.37 million and $495,000 spent in restructuring costs.
In an email sent to members FPA board chair Steve Helmich said lower than expected enrolments in the association’s education programs contributed to much of the deficit, with net income in education falling $3.2 million below full year forecasts.
Helmich attributes the lower than expected enrolments to competition in the education market, which “undercut our services with more flexibility while we were locked in to course dates with Deakin”.
As a result of this downturn in enrolments and subsequent operating loss, the FPA will now outsource its education courses, and is currently in discussion with a number of education suppliers.
FPA chief executive Kerrie Kelly is of the view that if education is outsourced the FPA will maintain control over providers in the market place through its role as the standard setting body.
According to Kelly, the number of other education providers in the market means “it’s not feasible for the FPA to be a sole provider of education”.
Helmich and Kelly also say rather than provide entry level education for members, the FPA wants to focus on higher levels of education, for example promoting and developing the CFP designation.
“The CFP designation will remain the property of the FPA - it is something we cherish,” Helmich says.
Last year’s annual convention, held in Adelaide, also impacted negatively on the results, returning a surplus that was $400,000 below budget.
According to Helmich the scale of the expected loss was not apparent until the board’s February meeting.
In response the FPA says it has reduced the budget for the current financial year by $2.4 million and the management of the association is drafting a business plan for the 2004/05 financial year to generate a surplus.
The FPA says while the deficit will reduce member reserves the association still holds a further $4 million in reserve and the board moved to notify members before the end of the financial year in an effort to maintain transparency.
Helmich stated that member services would not be affected and the FPA will be able to deliver on its commitments to members as it has removed those activities it deemed a distraction, however Kelly says as part of the future changes some services which were previously free may now move to a user-pays model, such as some compliance services.
Meanwhile, Kelly has moved to reassure members in saying, “if I cannot show my staff, members and other stakeholders that we can show a marked improvement in member benefits, then I shouldn’t remain in this role”.
The FPA has also admitted that it is talking to number of groups with like-minded interests about mergers, but will not name who they are at this time.
AUTHOR
Jason Spits
Recommended for you
In this week’s episode of Relative Return Insider, hosts Maja Garaca Djurdjevic and Keith Ford take a look at the Reserve Bank’s latest rate cut call, the factors influencing the unanimous decision, and what economists expect from the rest of the year.
In this episode of Relative Return Insider, host Keith Ford is joined by Accountants Daily journalist Imogen Wilson to take a look at why there has been such broad support for a more comprehensive tax reform discussion at the Treasurer’s economic roundtable.
In this week’s episode of Relative Return Insider, AMP chief economist Shane Oliver joins the show to discuss Australia’s stagnating productivity ahead of the government’s economic reform roundtable, and how picking all the “low-hanging fruit” for reform in the ’90s helped kick off a surge that has since stalled out.
In this episode of Relative Return Insider, host Keith Ford is joined by Cyber Daily deputy editor David Hollingworth to take you inside the evolving landscape of cyber crime, how even huge companies can be at risk of breaches, and what that means for anyone trying to understand the risks.
