Following AMP’s decision to reduce BOLR arrangements from 4x to 2.5x for fee paying clients and a multiple that would be worth close to zero on grandfathered fees, ifa revealed that AMP advisers received termination letters from the company. These letters offered advisers the following options:
1. Exercise BOLR rights under the new reduced valuation;
2. Take up AMP’s ‘one-off’ offer;
3. Secure appointment as an authorised representative of another AFSL and apply to AMPFP for the release of client institutional ownership terms; or
4. Join or merge with another AMP practice or sell client register rights to another AMP practice.
Advisers also have the option of taking no action, in which case AMP will cancel the AR status of the planner and take back their clients, with any loans remaining payable to AMP Bank.
AMP’s ‘one off’ offer is effectively the same as BOLR with a strict confidentiality clause that states:
“The practice and the practice principal must keep confidential all information about the one-off offer, 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.”
AMP advisers must choose one of these options by the end of the month (31 October 2019). But planners have revealed that when they ask the company what their business is worth, they are told that “unfortunately exact valuations are not available”.
AMP planners who spoke to ifa did not wish to be named, but expressed their frustration that AMPFP has changed the definition of ‘grandfathered clients’ three times this year. They claim AMP is using grandfathered revenue to further devalue their businesses.
AMP advisers are fearful to go on the record for fear of retribution or a further devaluation of their business. But ifa has spoken to several AMP planners over recent weeks and discovered that they are now preparing to sell their homes to pay back loans from AMP Bank used to fund the acquisition of client registers.
Last month ifa asked AMP wealth boss Alex Wade if AMP Bank would consider reducing the loan balances for advisers, given that it was the group’s decision to devalue the assets.
“That is an individual discussion that we are having with each individual practice and the bank,” Mr Wade said. “Fortunately, or unfortunately, there is no one-size-fits-all. Each practice and each circumstance is very different, which is why it is a pretty big task.”
But AMP advisers say the group is providing no support or individual negotiations at all. Many have told ifa that they are in significant financial stress and the pressure of not knowing where they stand on the matter is having an impact on their health and personal relationships.
Planners issued with a termination letter told ifa they are now unable to write any new business as they cannot consciously take on a client knowing full well that they will be terminated by the end of the month. Meanwhile, any requests for relief of their loan repayments to AMP Bank are denied. Advisers continue to pay a licensing fee of up to 23 per cent.
Email correspondence seen by ifa shows the nature of the conversations between practice principals and AMP Bank representatives. One email stressed that the adviser was to repay “all monies” borrowed and suggested they “seek legal advice”.
The emails show AMP Bank has requested advisers “work with AMPFP to get the full value of the asset”. But after contacting their AMPFP BDM, advisers are being told to deal directly with the bank.
With no clear answers from AMP Bank or AMPFP, advisers are growing increasingly concerned about their financial future as the 31 October deadline set by AMP draws nearer.
A number of AMP advisers told ifa that they will be forced to sell their family home to repay their debts. They also confirmed that they have been instructed not to tell their clients about their termination. Instead, AMP has provided them with a template letter to send to their clients before they move on.
The only hope for many advisers is the AMP Financial Planners Association, which is preparing a legal case against the embattled wealth manager. Association CEO Neil Macdonald confirmed to ifa that he has spoken to a number of funders who have expressed strong interest at ‘competitive terms’ and said that ampfpa is in the process of finalising the lawsuit.
If you have any information about the impact of AMP’s BOLR changes on advisers and their clients, please contact ifa editor James Mitchell at james.mitchell@momentummedia.com.au
These poor, poor AMP advisers. The behaviour of AMP is way, way beyond horrific to the point where one cannot believe what one is reading about it. But for the grace of God go I, as the saying goes. This ‘could’ be anyone of uis and, God forbid, possibly could be as other companies perhaps become emboldened by AMP’s success if they have any at the end. This AMP behaviour really scares and unsettles me even though I happily have nothing to do with them. I wonder how these mentally altered executives think they can possibly continue a business in future with behaviour like this. What adviser in their right mind would want anything at all to do with AMP after this? Honestly, who would? Interesting none of the execs at TAL, Zurich, MLC, AIA, et al have commented at all yet on this abysmal and industry destroying behaviour of AMP. Every aspect of this nightmare just boggles the mind. This is the sort of mess and ethically bereft behavious ASIC should be taking note of to act upon in the not to distant future. I wonder if this could be a case study for FASEA’s ethics exam!
So what happens to AMP bank when all the loans default and the asset securing the loan is worth nothing?
[quote=GenX Planner]Hi AFA/FPA.
How are those conferences going?[/quote]
i can’t believe people PAY to go to these things. just unbelievable. what sort of people go to these conferences? they must live under some huge rock.
what do the FPA and AFA have to say that is relevant to a financial planner. nothing.
they are two most useless organisations on the face of the planet.
What AMP will do is hold out on paying out these AMP aligned adviser until these books are worth nothing then buy them out at whatever rate as they are virtualy worthless. I feel sorry for the young AMP advisers, however you older AMP (and other older) advisers who were all charging 2% contribution and 5% ongoing fees are a big part of the reason we have had the royal commission and FOFA. Why did you have to get so greedy and ruin it yourselves and the younger guys like myself
[/quote]
AMP is contractually obligated under the BOLR terms to consult with the AMPFPA before any changes can be made.
Let me know what sort of hat you would prefer to eat……[/quote]
You just agreed with him by pointing out it DOES NOT SAY “Negotiate”
Consult does not equal Negotiate
[quote=lol negotiate…]
If it says “notify and negotiate”…I’ll eat my hat…Think it’d say notify, in your dreams it says negotiate. The class action will determine if the notify happened..
[/quote]
AMP is contractually obligated under the BOLR terms to consult with the AMPFPA before any changes can be made.
Let me know what sort of hat you would prefer to eat……
[quote=Anonymous]AMP will only let you leave once the bank loan is paid out in full.. it is an ambid claim as they know that these practices wont be able to get finance[/quote][quote=Anonymous]AMP will only let you leave once the bank loan is paid out in full.. it is an ambid claim as they know that these practices wont be able to get finance[/quote]
It’s “ambit” boof and also what would you know about the subject? Clearly nothing.
AMP will only let you leave once the bank loan is paid out in full.. it is an ambid claim as they know that these practices wont be able to get finance
I am a disgusted AMP adviser. I invested in good faith and have worked hard to grow my fee for service clients and to move the practice away from grandfathered commission. I have no problem with reforming BOLR, ending commissions etc. The only issue I have is the speed of the reform. As a relatively new business, I have not had the time to transition my business.
In respect to Mr De Ferrari, what a pathetic human being. The fact that you have come in to destroy planners, their families and their mental health. Whatever you do Mr De Ferrari – just remember that the AMP business was built over many years. The planners helped to build the business. The planners helped to retain clients with all of your scandals over the years. Your planners put up with crap, incompetent management and systems that were just hopeless. More importantly, YOUR PLANNERS DESERVE RESPECT.
[quote=Anon]Re “Option 3 – leave and take your clients with you”, some commenters seem to think they should be paid BOLR as well as retaining the clients. Surely it has to be one or the other, not both. As for repaying loans before leaving, why would that be necessary? As I understand it, the loans are primarily secured by advisers homes, not the client books. If an adviser retains the clients and continues earning an income elsewhere which allows them to service the loan, why would the loan need to be repaid?[/quote]
if you leave and take your clients with you then i understand there is no payment as AMP would release the clients. So its not both ways. Also if you borrowed as was encouraged i understand, to borrow at 4 times and now the book is worth 2 times. What the media and commenters here are not picking up on is that most businesses would hold more grandfathered business than is reported. The purchased registers often are near all grandfathered, so these values are not 2.5 but 1.3 and dropping each month. So if you borrowed a $1 mill for a register when starting, your value now could be $200,000. The income from the register will not support the bank payments in future and thus the bank calls in its loan and the adviser is left with nothing and not a home.
[quote=Anonymous]Before people start spouting perhaps have some clue what you are talking about.
“There doesn’t seem to have been much reporting of “Option 3 – go to another licensee and take clients with you”. The whole reason AMP’s BOLR was based on above market values in the first place was to compensate for an inability to take clients elsewhere.”
AMP has institution ownership of the clients and in most cases is retaining that ownership. So NO, you dont get to take your clients with you. You have to hand them back to AMP and you also have a non-compete that is in the BOLR contract.
“There has always been a clause that changes don’t require 13 months notice if in respect to economic shift – strange that’s not mentioned.”
There is also a clause that contractually obligates AMP to notify and negotiate with the association in this event. It didnt happen.
“i’d suspect there is more support being offered or there would be names of practice’s and planner in these articles”
Not true either. Most practices, even the ones that are staying, are in the dark.
[/quote]
May I congratulate you on your post. Totally correct and informed. However why does it get 70 odd dislikes? Did readers not realising you were quoting others and then adding your comment. please re read his post.
[quote=shareholder]Shareholder would have to support the change in multiple. Stemming the losses that the company has been wearing for years. Whilst it’s hard for planners, the writing has been on the wall for years, in big bold paint. There has always been a clause that changes don’t require 13 months notice if in respect to economic shift – strange that’s not mentioned. Hard to argue that shift has not occurred. If they have not re-acted, then they are probably not a business the industry should encourage. Have they been actively converting Grandfathered clients into OFA’s?….probably not because they are worried that they clients will be shocked to find out there is someone getting paid who has done nothing. I don’t think houses will be sold, and i’d suspect there is more support being offered or there would be names of practice’s and planner in these articles. [/quote]
It appears to me that you dont understand. Good luck with your shares, its hard catching a falling knife. You should revisit the deception told on the 8/8/19 and familarise yourself with the contract. How can u activily convert all to OFA’s in a short period? Do you understand how long it tales for just one client? Do you understand everyone has personal positions an fdthat could have been health issues that kept them out of work for a year or more? Do you understand that fees for service is far higher cost to each client in many or most client cases? Is it really in the best interest of the client to charge far higher fees?
As there seems to be know advisers writing business with AMP and most may well be reviewing clients away in the best interests of clients, i dont see AMP doing well out of this and its very likely in two years that they will not have any advisers. trust is a big issue and who has trust with AMP now? They burnt even their supporters who helped over decades to make AMP a once proud icon. I see a Kodak moment…..Flash and its gone. Oh, your a shareholder-commiserations.
RE:
“Before people start spouting perhaps have some clue what you are talking about.
“There has always been a clause that changes don’t require 13 months notice if in respect to economic shift – strange that’s not mentioned.”
There is also a clause that contractually obligates AMP to notify and negotiate with the association in this event. It didnt happen.”
If it says “notify and negotiate”…I’ll eat my hat…Think it’d say notify, in your dreams it says negotiate. The class action will determine if the notify happened..
I think all the IFA Advisers should boycott anything to do with AMP. AMP have always been internally focused and always believed they owned the client. That mentality went out of with overrides and BOLR. Whoops perhaps still around at AMP.. I have not written an AMP policy in 10 years and it is time we push back on them and push back hard.
Shame Alex, Shame what AMP has become!
Re “Option 3 – leave and take your clients with you”, some commenters seem to think they should be paid BOLR as well as retaining the clients. Surely it has to be one or the other, not both. As for repaying loans before leaving, why would that be necessary? As I understand it, the loans are primarily secured by advisers’ homes, not the client books. If an adviser retains the clients and continues earning an income elsewhere which allows them to service the loan, why would the loan need to be repaid?
Ash I will defend Steven comments about the role of the FPA and ask; have you not heard of the word “scapegoat”. Ash an industry without representation such as financial planners are easy pickings for firms like AMP that are looking to dodge regulatory action. One reason amongst many, as to why we’ve had so much Government intervention is this lack of representation where bodies like the FPA would rather a $60,000 + cheque every year from AMP and the guaranteed source of members as opposed to a looking after the needs of Australians and those individual AMP planners themselves.
Ash, surely you’ve head of the formula CBA + FPA = FASEA. Adele Ferguson of the AFR wrote a book and the story is in it. The FPA sold out members, were told to remain silent and sided with management and now we have FASEA. The FPA made a decision as to whether to act for AMPFP or AMP Advisers and they’ve made a choice to remain silent on all the issues resulting from AMP, CBA Advice scandals, and that lack of silence directly lead to the situation where AMP and all advisers are now.
Hi AFA/FPA.
How are those conferences going?
AMP as a company, a brand and an institution is dead.
They are getting all their affairs in order before they are buried.
Just remember the FPA board elections are coming up and if you want to be fooled again you’d vote for the candidates that support the professional partner program (PPP). Via this relationship there is a clear conflict between whether the FPA works for AMP Financial Planning (via the cash payments received from the PPP) or works for Australians and AMP advisers. The outcome of this conflict is now impacting all advisers. Surely AMP advisers would not be a fool a second time around and vote for a candidate….. would you? I think if you did you get all you deserve.
I wondered why AMP paid volume bonus ‘s to some planners some well over $100k p.a each and every year for the last 30 years . How about you guys use that for ‘ Legal advice ” now ???
What AMP have done is indeed harsh, disloyal etc etc. But what are they expected to do? Just retain their current model under which they will eventually go broke? The nuclear option is the only one available to them. I feel great sympathy for the advisers, particularly those who have been a part of ‘Hotel California’ for decades, but I agree with comments below, it is common knowledge in the industry that AMP’s undeclared contingent liability on BOLR is in the hundreds of millions, even billions and has been thus for some time. Unfortunately those advisers should have had the commercial sense to jump off the titanic, knowing it would eventually hit the iceberg. It would be great to see AMP throw a bone to those advisers who have leveraged with AMP by devaluing the loan consistently with the reduction in BOLR.
Before people start spouting perhaps have some clue what you are talking about.
“There doesn’t seem to have been much reporting of “Option 3 – go to another licensee and take clients with you”. The whole reason AMP’s BOLR was based on above market values in the first place was to compensate for an inability to take clients elsewhere.”
AMP has institution ownership of the clients and in most cases is retaining that ownership. So NO, you dont get to take your clients with you. You have to hand them back to AMP and you also have a non-compete that is in the BOLR contract.
“There has always been a clause that changes don’t require 13 months notice if in respect to economic shift – strange that’s not mentioned.”
There is also a clause that contractually obligates AMP to notify and negotiate with the association in this event. It didnt happen.
“i’d suspect there is more support being offered or there would be names of practice’s and planner in these articles”
Not true either. Most practices, even the ones that are staying, are in the dark.
AMP CEO Francesco de Ferrari has just received a short term incentive of 120% of his $2.2 million salary and a 159% long term incentive bringing his 2019 total remuneration to $8.3 million !
So whilst AMP advisers are bleeding and their lives being destroyed, he is being rewarded for performance.
It is utterly disgraceful and unacceptable on every imaginable level.
Good comment re Option 3 by Anonymous just below – the ‘Reply’ function didn’t work for me. I presume any loans from AMP would have to be repaid first for Option 3. Also, you ‘apply’ – perhaps they let you go if they value your book at below 2.5 recurring revenue but you will have to pay otherwise. Also, there doesn’t seem enough time to arrange a final agreement by October 31 if you choose option 3.
The most downvoted comment on this article asks the AMP advisers to look in the mirror to see why they chose to work with AMP in a dependency relationship in the first place. AMP’s conduct has been plain to see for decades, even if you are not in the finance business. Why would you work with such a company? Because they would never turn on YOU?
There are lots of decent people working at AMP but as an adviser you have a special responsibility.
Shareholder would have to support the change in multiple. Stemming the losses that the company has been wearing for years. Whilst it’s hard for planners, the writing has been on the wall for years, in big bold paint. There has always been a clause that changes don’t require 13 months notice if in respect to economic shift – strange that’s not mentioned. Hard to argue that shift has not occurred. If they have not re-acted, then they are probably not a business the industry should encourage. Have they been actively converting Grandfathered clients into OFA’s?….probably not because they are worried that they clients will be shocked to find out there is someone getting paid who has done nothing. I don’t think houses will be sold, and i’d suspect there is more support being offered or there would be names of practice’s and planner in these articles.
There doesn’t seem to have been much reporting of “Option 3 – go to another licensee and take clients with you”. The whole reason AMP’s BOLR was based on above market values in the first place was to compensate for an inability to take clients elsewhere. But if that restriction has been removed, it would seem to solve a lot of AMP advisers’ problems. In many cases it provides an opportunity for advisers to add value to their clients by getting them out of AMP products!
Has anyone heard whether AMP is honouring their “Option 3” promise and is allowing advisers to take their clients elsewhere?
Steve – How can you blame the FPA or AFA for AMP Management decisions You clearly have an axe to grind outside of this issue relating only to AMP
FPA. The FPA is to blame basically.
They masterminded this whole industry collapsing thinking they would make millions and they did. Execs earnt millions, the FPA earnt tens of millions and you the adviser are left holding the whole stinking pile of horse manure called your business and career.
Want to blame someone, delete your FPA and your AFA membership. These parasites deserted every planner.
Told AMP a few weeks ago to remove me and my company from their marketing mail outs…
[quote=Former planner]Interesting that these are the same people dispensing financial advice. Somewhat ironic about the whole situation.[/quote][quote=Former planner]Interesting that these are the same people dispensing financial advice. Somewhat ironic about the whole situation.[/quote] – an absurd comment from a ‘former adviser’ – are you now an AMP BDM catching up on IFA news?
Whether you are an adviser or customer how could you ever trust AMP with your funds again ? AMP have destroyed their brand. Quite amazing that a business that relies on trust and long term relationships will make a short term decision that has destroyed both trust and long term relationships. AMP Brand = Our profits are more important than ethics and empathy and advisers and customers who engage with us do so at their own risk.
Amp did this in the late eighties it was called. Agents development loan. Thank god people like my self got out or I would have been one of these poor casualties hope they get over this low act by amp
Do what I did with Nat Mut 25 years ago when they fired me on my honeymoon and wanted their ADl and my home. Find a legal team prepared to back you all the way. Tell the other side you have a legal team backing you all the way. Serve papers in the industrial court under “harsh, unfair and unconscionable conduct”. Serve papers in the federal court under ” false, misleading and deceptive conduct”.
Remind the other side you are prepared to go all the way. I can’t tell you the rest……I signed a “confidentiality agreement”
These small business advisers need to contact ASIC and the ACCC and gain some power back as it appears to be a classic case of unfair contract terms based on the B2B supplier arrangement!
This is an absolute travesty of corporate greed and a severe lack of empathy.I was once (thank God i sold and escaped) an AMP advisor, purely based on their very low lending criteria for external business. BUT… once in the fold it was a case of “we own your clients and you will use our products” While trying to be as independent as i could, it was damn near impossible due to the pressures of AMP BDM etc.
NOW… we will have a number of suicides due to advisors under severe financial stress having purchased at 4X and borrowed against the asset based on that, now they have lots $$$ thousands.
AMP will have further action against them i am sure, from bereaved families seeking compensation from AMP for their loss and further ongoing trauma.
I sincerely hope AMP has deep pockets (getting shallower) as the financial fallout will be huge, how the Csuite within AMP conduct themselves has been despicable.
My futurist prediction is this…
[i]No-one will use AMP, the brand is dead.
The bank will remain (as a pure deposit taking and mortgage entity).
AMP will be closed down as an organisation and may even (due to high legal costing and payout of not only RC outcomes but Advisors families claiming for preventable suicides)
There will be a number of cases in Federal Court against them, and they will effectively seek bankruptcy to avoid the payouts[/i][i][/i]
AMP management must have no conscience. They openly encouraged advisers to buy books at 4x on restricted terms – only and pull the rug out from under them with lower values, but similar restrictions. Then, whilst breaking contact themselves (13 month notice rule), they try and restrict advisers that they have sacked from moving onto new licensees and lives. The foundations on which AMP was built , and stood for for a 170 years, are gone…. All in the name of a higher s-term SP and incentives for management. They’re a disgrace.
[quote=Former planner]Interesting that these are the same people dispensing financial advice. Somewhat ironic about the whole situation.[/quote][quote=Former planner]Interesting that these are the same people dispensing financial advice. Somewhat ironic about the whole situation.[/quote]
An unnecessary comment from someone that does not understand the situation. Those of us affected by this are suffering in real life and were blindsided by the course of action being taken by AMP. We thought we had a long future ahead of us and then at a moments notice the rug was pulled out from under us. These types of comments are both unhelpful and ignorant.
@former planner, not sure what you are implying? Planners practice what they preach. Not sure how you think one can plan for such conduct and what seems to be breach of contract?
Shame AMP shame!! The behavior is disgraceful!!
Interesting that these are the same people dispensing financial advice. Somewhat ironic about the whole situation.
Good story. Well done James.
They won’t lose their homes,.
AMP have bitten off more than they can chew here. I’d say this might also be the final corporate post for Wade and Fiat and many other AMP staff as well based on the approach they have taken here.
Hang in there,