Independent financial planners in Hong Kong have set up a new advocacy organisation to work for financial advisors. The Independent Financial Advisors Association (IFAA) has been established as a non-profit entity partly in response to increasing regulation.

ôA few months ago, the Securities and Futures Commission asked various IFAs for comments about compliance and regulation,ö says Sydney Sze, CEO of Midland Wealth Management and the IFAAÆs new chairman. ôWe thought it would be best to have one voice.ö

About 200 IFAs, representing 3,000 individual financial planners, are founding members.

The IFA community has so far failed to make a dent in banksÆ market share for distributing investment products. It has also come under greater scrutiny from regulators due to a number of scandals such as Towry LawÆs conviction for mis-selling of geared with-profits bonds to Hong Kong investors.

Phil Neilson, CEO at the Henley Group and one of the IFAAÆs vice chairman, says raising standards is an important part of the new organisationÆs agenda. He says part of the problem is the fact that financial advisors fall under multiple regulators, which apply rules in different ways.

ôWe need a best practices manual,ö he says. ôWe lack templates for best practices from the industry or the regulators.ö

Neilson also expresses frustration with the habit among regulators to suggest financial sector companies seek legal advice when laws are unclear: ôHow does a five-man operation seek legal advice on every aspect of the business when regulators donÆt give opinions?ö

But the biggest complaint is that, because these small, independent firms lack a clear regulatory framework, they canÆt compete on a level playing field against banks, insurance companies or securities brokers. For example, IFAs require multiple meetings with a client to close a transaction, but a bank teller can pitch a similar product in one go, and without the same licensing requirements. Unit-linked investment products are especially difficult for IFAs to sell, says Sze.

To give the new organisation a sense of mission, it has already commissioned a poll amongst IFAs, which shows the great majority want the IFAA to address unfair market practices, serve as a common voice vis-a-vis the SFC, ease limits on selling unit-linked products, disclose remuneration practices and help set industry standards.

Glenn Turner, COO at Altruist Financial Group, and Alan Tsui Ka-Lun, director at Taifook Lexton Group, are the IFAAÆs other new vice chairmen.