Earlier this month, AMP announced that it would be reducing its adviser network and devaluing aligned practices under its buyer of last resort (BOLR) arrangements by 37.5 per cent.
In recent weeks, AMP advisers received a letter from Brian George, managing director of AMP Financial Planning, which outlines the five options advisers have to leave the group. One of those options is to do nothing. Those who choose to take no action will have their authorisation and contractual agreements terminated within 180 days.
One option is for AMP advisers to exercise their BOLR rights and sell their business back to AMP for 37.5 per cent less than they were initially promised.
Advisers also have the option of taking a “one-off offer” buy-back arrangement that replaces all rights practices have to a BOLR payment under the policy.
The letter, seen by ifa, notes that “the practice and the practice principal must keep confidential all information about the one-off offer, including this document, the settlement agreement and the exit terms and must not disclose, nor allow a third party to disclose, to any person such information unless such disclosure is approved by AMPFP, required by law or to legal or accounting advisers on a needs to know basis”.
Advisers have also been given the option of securing appointment as an authorised representative of another Australian Financial Services (AFS) Licensee and apply to AMPFP for the release of client institutional ownership terms.
Finally, they can join or merge with another AMP practice or sell their client register rights to another AMP practice.
In the letter, Mr George explains that the financial advice industry is experiencing “significant disruption”.
“Increasing regulatory scrutiny, rising education and professional standards continue to place unprecedented pressure on advice businesses,” the letter states.
“As part of a review of AMP’s strategy in the advice business, AMP has undertaken a review of its advice practices across the AMP financial planning network. Unfortunately, AMP has determined that your practice does not align to this strategy.
“As a result, AMP Financial Planning Pty Limited (AMPFP) has made the difficult decision to terminate your corporate and individual authorised representative status. AMPFP has made this decision because your practice does not meet the thresholds that we have set under AMP’s future strategy.”
A number of AMP advisers remain in debt to AMP Bank, which funded their acquisition of orphaned client books. Records show that advisers across the network owe between $400 million and $500 million to the bank.
More to come.
[quote=Anonymous]Well hasn’t that put the fox in the hen house! The confidentiality around offers should stay confidential at least until tomorrow morning’s press. The ones I feel sorry for are the advisers who came through the Horizons program, bought a book or an exisiting business and borrowed from AMP Bank. Any other quality adviser will just have a quick grizzle and move on to greater things. The rusted on advisers who relied on the old style mateship relationship with “old” AMP management and bullying AMP should have been smart enough to expect the pendulum to swing back and should have been prepared ie had a Plan B – if they didn’t, well, perhaps they weren’t worldly enough to be advising clients in the first place. Yes it’s all brutal but business is business and we really are only seeing the long over due shakeup of the industry.[/quote]
You may think you have a valid point. However management had doubled down giving firm commitment that the BOLR would remain and advisers could rely on it. Afterall, it was a bipartisan agreement from 2013. I think you and many and being harsh thinking the writing was on the wall….invisible ink is not good enough when management show support and confirmation along with laws for grandfather. Now we have a new era where grandfathered means nothing as the grandfathered can be removed….WTF! For those that talk like they had a crystal ball, well good luck guys. maybe your experience is also not what you think it is. “old style mate-ship” “Old” give these advisers a break, only the person who says this is in the dark.
Gotta feel for those new to the industry that come through the Horizons program and were sold books financed from AMP bank.
Given that “no one owns a client”, I wonder how well AMP could enforce their institutional ownership while also removing people from their AFSL and changing the terms of BOLA?
To any AMP advisers worried about advising outside the AMP bubble, jump on in the waters fine. You’ll wish you joined us a long time ago!
I wonder where the AFSL’s are that would accept [after stringent Due Diligence, of course…] a large number of AR’s fleeing large institutional AFSL’s like AMP?
Where, oh where, is Dover [which, from 2015, had 40% of its new AR’s come from large institutions, usually along with their clients and FUM].
[b]Is the Institutional, ASIC facilitated conspiracy to destroy Dover suddenly starting to become clearer?[/b][b][/b] Where are Kell and Kelly on the status and evolution of the Industry?!?
Like electricity, gas, water, irrigation, immigration, environmental, and God knows how many other Government policies trying to “Impose ideology on biology” and propagate “Bureaucratic Totalitarianism”, the entire structure of the F/S Industry is wrong, porrly designed, perverted, and incentivises corruption. It is top heavy, bloated, ineffective, extremely expensive, and stifles innovation, transparent accountability, and ethical personal responsibility [b]that would come from individual licensing[/b][b][/b].
This is the cascading effect of 15-20 years of Government and Regulatory subservience to the Big Banks and large Institutions, an inability to think logically, systemically, and conceptually, yet pragmatically; and ideologically driven [not principled] policy structure left to lawyers, academics, and bureaucrats.
What industry has an Interposed Entity providing purely administrative services allowed to determine which qualified and experienced practitioners work? What Industry has all revenue flowing through a self interested 3rd Party [the AFSL], which virtually begs for corruption, mismanagement, inefficiency, confiscating other’s money and assets, a$$ covering, and creating monumentally self serving policies, rather than client focused activity?
Banks and large institutions fleeing from a situation which they should never have been involved in at a retail level, while trampling everyone along the way is a consequence of stupid, thoughtless, ideological, hierarchical “Government “Food Chain” policy.
This is a mess which take at least 5-15 years to flush through; [b]cost billions[/b][b][/b]; destroy multitudes of lives and businesses; and leave Australia much poorer for it.
Some of the comments below show why the FP Industry is in the position that it is. “Anonymous” is scamming already not because of sickness but trying to scam economic necessary changes that happen in business. Sometimes I think the industry deserves some of what it is getting. All businesses in any field will cause participants some stress. But to scam it is really unprofessional.
Very sad for planners that might be thinking about suicide . Don’t do it . For those planners that are stressed, I would put in an Amp income protection claim while you are still earning money. Put it in a bit later and they will pay out less . Stress ,I believe is one of the biggest claims going forward……
Wow. So glad I left that group of snakes a few months ago. Feel very sorry for my Principal though
I looked at AMP many times over the years. Paying 4x to not even own the book was a major red flag. No idea how so many advisers ended up getting in that bed? I know many had best intentions but this is a capitalist society. No different to taxi drivers when they cut license values. You go into ANY business, you assess risk and make a call and sometimes you get it wrong. If you go in geared too high @ 4x in a bull market and don’t grow your book (equity), you (and spectators) learn a valuable lesson. I do not condone or like AMP’s response and feel they should be ashamed, but they are doing what every major listed company does, prioritising profits and shareholders, that’s happened since the dawn of time and should not come as a surprise?… Shame on AMP, but responsibility doesn’t lie only on their shoulders. Genuine best of luck to all impacted advisers.
AMP have now now decided to cast off….
1. Life insurance clients. They will face dealing with a potentially less capitalized and less willing to pay overseas owner who will not care about brand damage – they don’t sell anything.
2. Clients in the old AMP products that have made AMP hundreds of millions each year.
3. Many Advisers who for all the noise have been supporters of AMP and succeeded only because clients value
them.
4. The clients of the advisers that they cast off to other licensees as they don’t want to suppport the adviser but will let someone else do it.
AMP client focused? What rubbish.
AMP are not cleaning house. They are throwing people overboard to save their sinking ship.
My empathy goes out to all those great AMP advisers and their families affected. Just want to thank an ex-AMP adviser for warning me in 2009 against buying an orphaned client base using borrowings from AMP Bank Ltd after finishing at the AMP Horizon Academy. To this day and for always I am truly grateful.
Hello Slater & Gordon.
Class action from the shareholders.
Followed by class action from the advisors.
Followed a huge hole in the balance sheet.
Houdini does could not escape from this.
I’ve officially changed the FPA to FCA…Financial Corporates Association. Useless and conflicted to the eyeballs.
I suspect history will show that the Leavers from AMP will do better in the long run. Better to exit as an adviser now and take your loyal clients. The ongoing tragedy will be the larger Remainer AMP practices who are doubling down with AMPs conspiratorial “we will offset your BOLR reduction with the clients of exiting advisers” strategy; the Remainers who accept that offer will have twice sold their souls and their clients best interests. Should make ASICs future targeting more focused.
Take it and RUN. While there are some buyers thinking an FP business is worth anything.
[quote=Anonymous]Not being a legal eagle but how can you keep a confidential offer confidential if you have not signed a confidentiality agreement first ? .l would suggest do nothing and see a lawyer ? hopefully the AMP Agents society or group organizes a general meeting with all planners ASAP or if they have one organises a class action ASAP !!!!! AMP are trying to steam roll everyone as per their previous M.O . Dont be fooled [/quote][quote=Anonymous]Not being a legal eagle but how can you keep a confidential offer confidential if you have not signed a confidentiality agreement first ? .l would suggest do nothing and see a lawyer ? hopefully the AMP Agents society or group organizes a general meeting with all planners ASAP or if they have one organises a class action ASAP !!!!! AMP are trying to steam roll everyone as per their previous M.O . Dont be fooled [/quote]
contact terry at dover, tm@dover.com.au. he is a good financial services lawyer. he will help you jam amp back (he is good at jamming, although he himself got jammed in the end by the RC).
he may have lost his practicing certificate however as a result of the EU with ASIC and not being of good fame and character
but contact him anyway. give him some biz.
FPA , where are you ??? You are supposed to be representing the interests of planner members not AMP . Where is the comment , outcry etc Dante ??
But imagine what AMP will save by not paying the Volume bonus read marketing allowance going forward!!!!. great for Amp but not their planners . Maybe All planners should think twice about putting business with AMP given their grilling at the RC and best interests responsibility .They also could cancel current products going forward if they feel like it leaving egg on the planners faces ……
Some poor comments here…with that lack of empathy, you wouldn’t be out of place on the AMP board. These advisers bought in at 4X based on a contractual promise, they commenced large practice loans at 4X based on a contractual promise, and then most of them worked hard to transition these commission based books into proper Advice practices…and then this??? If any adviser recommends AMP to a client ever again, they should hand in their AR…some wonderful people work at AMP, but the board of this company cant be trusted to do the right thing by anyone, but themselves.
I feel very sorry for the AMP advisers effected. Lets not forget these are people with families and bills who have worked hard to create a business and to make profit for AMP.
Its the AMP management who were to blame for fees for no service. Orphan clients they had direct responsibility for and who they still charged fees for. It was not the clients being looked after by AMP planners.
Not a single AMP exec will face punishment for this but the same mongrels are happy to throw AMP advisers under a bus for their wrongdoing.
AMP should wipe the debts for the clients they sold at 4x or at least reduce the debt to 2.5x.
They won’t though because they are corrupt execs putting profit before people.
Some of these comments are disgusting and typical of how those involved in this industry turn on each other. The majority of these affected advisers are hard working small business owners who have spent many years building their business’s from scratch., and on the way have ensured that many Australian families are protected if an unexpected event were to occur and also help build there wealth for retirement. Disgusted with AMP and disgusted by some fellow Advisers.
Some of the comments in here from people seemingly enjoying watching the fellow planners lose their livelihoods is disgusting. They should be ashamed of themselves.
Well hasn’t that put the fox in the hen house! The confidentiality around offers should stay confidential at least until tomorrow morning’s press. The ones I feel sorry for are the advisers who came through the Horizons program, bought a book or an exisiting business and borrowed from AMP Bank. Any other quality adviser will just have a quick grizzle and move on to greater things. The rusted on advisers who relied on the old style mateship relationship with “old” AMP management and bullying AMP should have been smart enough to expect the pendulum to swing back and should have been prepared ie had a Plan B – if they didn’t, well, perhaps they weren’t worldly enough to be advising clients in the first place. Yes it’s all brutal but business is business and we really are only seeing the long over due shakeup of the industry.
[i]Advisers have also been given the option of securing appointment as an authorised representative of another Australian Financial Services (AFS) Licensee and apply to AMPFP for the release of client institutional ownership terms.[/i][i][/i]
does that meean AMP advisers can move to any AFSL, and take their clients over? (but of course retain their debt)
I think AMP mgmt should be sitting the faesa ethics course
This is a vey human concern. I have had a confirmation that there has been a suicide of one Tasmanian AMP Financial Adviser . There are many others who are on disability claim. This is not the answer AMP. You should be backing your advisers because without them you would not exist. Your shareholders have abandoned as you have your advisers.
At least the FPA CEO still has his job….despite these changes. I guess a nice little lump sum payment each year via the “Un-Professional Partner Program” keeps them acting for AMP and AMP planners under a mushroom called the 1980’s.
Seems fair right ? Haha
I guess some of these AMP Dinosaurs just got hit by their Asteroid, poor bastards. AMP have been brainwashing their sales representatives for years and then they just dump them. FoFA came out in 2012 and the concepts of a fiduciary, the banning of commissions and best interest was floated in 2010 so none of these changes are new. One could say, these individuals have had almost a decade now to amend their business practices. However AMP have purposely and unethically kept their advisers oblivious as to the meaning of a “fiduciary relationship” instead keeping these poor soles in the dark and deep within the AMP cult. It’s been done purely in order to get more FUM… and now being caught out for the unethical crooks they are, they are just dumping these poor fools.
Not being a legal eagle but how can you keep a confidential offer confidential if you have not signed a confidentiality agreement first ? .l would suggest do nothing and see a lawyer ? hopefully the AMP Agents society or group organizes a general meeting with all planners ASAP or if they have one organises a class action ASAP !!!!! AMP are trying to steam roll everyone as per their previous M.O . Dont be fooled
There are plenty of advisers willing to leave AMP but AMP won’t let them get out of the door. The truth is that AMP wants the client bases of their advisers and they want them for free.
AMP and AMP Bank were happy to sell and finance to is at 4 times only to buy it back at 2.5 times.
And then these wonderful executives will end up paying themselves an enormous bonus for the huge profit they made shareholders.
Draining the pond!