The comprehensive strategy announced by AMP will see big changes and will likely include steep cuts to its large adviser network as the wealth giant moves towards automated advice.
AMP positioned the reinvention as “helping client realise their ambitions” and said it would include shifting focus to direct-to-client channels and digital solutions.
However, for advisers this likely means job cuts as the bank reshapes aligned advice by using “fewer, more productive advisers.”
Chief executive Francesco De Ferrari said the adviser network of AMP was over 2400 and they were critical to getting AMP to where they were today.
“This industry and profession is undoubtedly going through significant and radical disruption and transformation. We will stand behind advisers and support them through this complex transformation,” he said.
Mr De Farrari did say though that having gone through similar disruptions roughly a third of advisors left the businesses involved but those that went on transformation would see their business improve.
“We are not going to talk about numbers of advisers, it’s not going to be the number that counts. It’s the quality and professionalism that’s going to be critical,” he said.
Mr De Ferrari said that AMP would work with its advisers to make sure the transition to this new strategy was done in a supportive way.
“We want to continue to partner with our financial aligned advisers but we have to recognise that the industry trends are reshaping this business and we will partner with them to make sure we do this reshaping with the least collateral damage possible for them and for the client,” he said.
AMP will also further integrate the wealth management with AMP Bank solutions to target double-digit earnings growth.
The new strategy does not come cheap with the wealth giant anticipating it to cost between $1.0- $1.3 billion with its aim to be to drive growth, reduce costs and de-risk the business.
The cost-reduction program will achieve $300 million in annual run-rate savings by the 2022 financial year.
The program would be partially funded by fully underwritten $650 million capital raise along with the completed sale of AMP Life.
Last month it was reported that the AMP Life sale had been held up by the Reserve Bank of New Zealand and looked unlikely to proceed.
However, AMP has announced a revised agreement with Resolution Life with updated terms that will deliver a consideration of $3.0 billion ($2.5 billion in cash and $500 million in equity interest) with the sale expected to be completed by the first half of 2020.
The proceeds will be used to fund separation costs which remain at $320 million post tax, repay $800 million in debt and fund capital dis-synergies of $160 million.
AMP Wealth Management reported operating earnings of just $103 million in the first half of 2019, a 49.5 per cent decrease from this time in 2018.
Operating earnings were impacted by margin compression from MySuper fee reductions, advisers moving clients to contemporary solutions and the removal of earnings transferring with AMP Life.
Mr De Ferrari said the 2019 would be a year of transition for AMP as it looked to reset and de-risk the business.
“The capital raising and the AMP Life sale will provide the funds to implement immediately our new transformational strategy, which creates a simpler, higher-growth and higher-return AMP that’s focused on clients and ensures that our balance sheet will be unquestionably strong,” he said.
Mr De Ferrari said the business would be supported by a billion-dollar program to transform which would put them on the path to sustainable long-term value creation.
“We are reinventing our Australian business to deliver a proposition that fulfils client needs with whole-of-wealth solutions including banking,” he said.
AMP are also cancelling their Advisers Bonus structure ( VPS) over the next three years , why isn’t that reported on by the Press ? How many lives will be lost due to suicides because the Senior Managment and Board do not care about the people that have given their whole working life to this organisation but are getting trampled upon due to the errors made by senior Managment in the past, an utter disgrace, and the board and Managment should be held to account.
A client of ours summed this up when he requested we move all of his Investments away from AMP.Ethics play a big part in my life
AMP hasn’t been an ethical company in the past and I see no change
I believe AMP is down sizing. Rather than using strength in products and processes to put them back on the map AMP is putting the shareholder first to reduce costs.
In the past AMP did the wrong thing by their clients. It looks like they are now doing the same to their own staff.
and If in their down sizing they remove good people then that puts my returns in jeopardy and I believe it is time to ask the questions and to move.
AMP… “A Sure Friend in Uncertain Times”… the CEO did not even have the balls to front up to the announcement today leaving it to his lackies.. The difference between the people who run AMP versus the financial planners who service their clients is that when we put our heads on our pillow at night, we sleep well knowing that we have a relationship, have helped our clients, shown care and empathy and most of all RESPECT. These are all attributes which are missing from these well educated, over paid, MBA qualified creatures called the AMP Executives. Welcome to transformation where destroying their loyal planners becomes an acceptable business strategy.. just pathetic
Are AMP advisers still locked in , and cannot seek third party buyers, or are they restricted to sell in to the BOLR and others in this restrictive arrangement
So does that mean the 200 + current BOLR applications that are in play right now, are going to be paid what’s owed to them AFTER the sell off and the capital raise?
Is that why you’re illegally delaying and lying to aligned practices about BOLR settlements?
AMP won’t get automatic / robo advice going. They took a perfectly good functioning product in Sales Force and stopped it working. This is without even worrying about Evolve and other attempts in the past. The majority of people in AMP need help turning on their computers from what I can tell.
So like ANZ,CBA,Westpac and now AMP the answer is to close the Advice business.In achieving this they avoid the ASIC adviser fee,All the new cost of reeducating advisers,Compliant tribunal fee,Compliance fees,FASEA exam fee and completely avoiding code of ethics etc.So now that we will have tens of thousands of people out of work why do we need ASIC ,FPA, AFA,FASEA as you now have a decimated industry or do you expect the few that are left are going to carry the cost??
How to flog a dead horse, by AMP….
AMP bought AXA and destroyed a business that once was the bastion of quality financial advice.
When things are travelling well and advisers are supporting an organisation and contributing to profitability, people are led to believe they are important.
When things go wrong, it is simply about corporate survival at all costs and people get wasted like they were never there and didn’t matter.
Advisers who have spent a large portion of their career building large, successful and profitable businesses and who have been loyal supporters must now be accepting that loyalty only goes 2 ways when both teams are winning.
A relationship is only ever under the control of those who care the least.
The catch phrases of transformation are what investors in the listed business want to hear at times when the can can’t be kicked down the road any longer. In fact the reality is the business model has that many legacy problems, transforming it will be like a 1 in 10 chance of working. Just look at Suncorp’s recent mea culpa after trying to “transform”. Good luck with that
Whilst the IT issue was between AMP and their provider, it doesn’t give us advisers (including those in Perth some of whom were in their offices at 7am trying to sign in). Another fail in a litany of issues over the past 2 years. We now await the conditions they want to change in each of the licencees.
The CEO and board are unquestionably incompetent. As we know it AMP is dead due to an underwhelming, poorly thought out future strategy. list AMP capital and the bank and give the poor shareholder a chance to recoup massive losses.
I think that the esteemed leaders at AMP are in MBA Over Drive.. the BS Bingo is coming thick and fast.. Sad that they are playing with peoples lives whilst giving themselves high fives on their new strategy.. I guess the Execs are seduced by their big bonuses and not their moral compass.. perhaps Ethics training should be a good transformation!
We have an entity that is corrupt to its core. Completely shafting their planners who have spent the best part of 2 years defending them for their own behaviour that has been publicly exposed.
Hilarious. I was unfortunate enough to work in AMP Advice a few years back and witnessed first hand some of the antics of the big wigs and I will watch from the sidelines as they destroy more lives not only their client’s but their people too. Hopeless.
Who does AMP think they are fooling? The head of AMPFP is the same guy that blew up $900m with AMP Advice business model. AMP 360 has failed. They tried and failed with the Evolve app. Their partnership managers are refusing to even speak to their adviser panels. Today, they couldn’t even deliver a webinar. This is a business in crisis.
So, a Swiss CEO who is here because he likes “the challenge” realizes that he needs to do a capital raising because of the costs.
They have a pressing need to turnaround a business that, from the life insurance perspective, appears to be structurally unprofitable and they want to run down and it requires a lot of capital.
They have a bank that relies a lot on securitization of the loan books, with Japanese banks being the ones who have the biggest appetite for MBS.
Aussie dollar is in a declining trend, meaning that the appetite for MBS is going to decline as the yield becomes less attractive and the currency moves in the wrong direction.
They have a wealth management arm that is losing literally billions in FUM flows every quarter, not including pension accounts.
They have Buyer of Last Resort clauses that means they are compelled to buy the book back off the adviser / offices.
They do not have anyone to work these customers that they are going to have to buy back and look after them with personalized advice – because people are looking to exit the industry and AMP themself admit they want to streamline the number of adviser.
When the grandfathered commission comes in, they won’t have any revenue flows from customers apart from the few BP’s that an asset manager harvests as part of their job.
The two people underwriting the deal to Insto’s are CS and UBS, they could have got GS, Mac.Bank or MS but chose the two Swiss institutions.
Look, if it was my money i would even think it’s overpriced at $1.50
Maybe the glitch was deliberate until the capital raising has been completed. Don’t want to scare off potential investors until after they have the money!
they cannot even run a webinar for their advisers (due to a technical glitch) – Goodluck with your Technology Revolution!!
Thoughts go out to all those today about to lose their jobs and livelihoods due to AMP.