When AMP’s new chief executive Francesco De Ferrari took up the top job he was well aware that the institution was in trouble. He was hired as a change agent and used the group’s AGM in May this year to explain to AMP shareholders that any large transformation of a company that has “been through such a crisis” needs to be anchored in its true sense of purpose.
“AMP’s sense of purpose goes back 170 years,” he said. “Many of the older buildings in which we operate still feature the Amicus statue, with the Goddess of Plenty standing above a family. It also bears a Latin inscription, which translated in English means ‘a certain friend in uncertain times’.”
But for AMP advisers facing an increasingly uncertain future, AMP has been anything but a “certain friend”.
One AMP adviser who wished to remain anonymous told ifa that the group’s actions toward its network of planners “tears at the fabric of what made AMP great, improved peoples lives and created a wealth management industry in Australia.”
“Placing an obsessive focus on shareholders ahead of clients is what got AMP into this mess in the first place,” he said. “They’re doing it again. There is a pattern emerging that concerns me. But without clients they won’t have any shareholders.
“How can anyone possibly expect an AMP adviser who is being forced out and possibly facing the loss of his family home to sit in front of clients and provide calm, well-considered advice? How could a licensee expect its advisers to keep defending AMP when it is treating them so callously?”
AMP-aligned advisers have shared their frustrations over the group’s decision to lower the multiple of BOLR arrangements to 2.5 times revenue while still keeping in place policies that make it prohibitive to continue earning a living.
Speaking to ifa, AMP Financial Planners Association CEO Neil Macdonald explained that the group has kept restraints on trade that mean once an adviser sells their business back to the company, they cannot work for three years.
“They have reduced the valuation from four to two and a half times but kept all the restraints of trade on so you can’t work in the industry for three years,” he said.
“If you go to BOLR there is a three-year restraint from working in the financial services industry.
“It is not a case of leaving and setting up again. If you don’t go BOLR there is a six-month restraint. It’s not just financial planning, it’s the financial services industry. You can’t even become an accountant.”
An AMP spokesperson told ifa that the buyer of last resort (BOLR) has always been an option available for business owners who are looking to retire and/or leave the industry altogether.
“Typical for commercial arrangements for business sales of this nature, BOLR includes non-compete clauses relating to other roles in the financial planning industry,” they said. “These terms have long been part of BOLR contracts and agreed to by practice principals.”
ifa also asked AMP if advisers are able to take their clients with them if they decide to leave the group.
“Contractual arrangements differ across licensee groups, reflecting different licensee arrangements with AMP advice licensees,” a company spokesperson said.
“As part of their respective contractual agreements, charter and a number of Hillross businesses can typically leave their licensee with their clients when they choose, while advisers authorised by AMPFP are generally unable to take their clients if they cease being authorised by AMPFP.”
AMP advisers have spoken to ifa anonymously and warned that clients have already started leaving following revelations about AMP during the Hayne royal commission. They say the damage to the company’s reputation has had a material impact on their business.
AMP advisers have also expressed fears for their clients if they sell their business back to the institution, which has revealed plans to roll out a robo-advice solution and drastically reduce its network of financial planners.
More to come.
I want to puke. These AMP pussies have been trading off the brand of AMP for decades. In reality they own nothing because they created nothing. These people have never built a business and franchise from the ground up. They are like pissant mowing franchisees. Pitiful at every level. Just go quietly.
As an ex-AMP adviser I believe the current management are underestimating the damage to AMP’s reputation. New clients would not have a bar of anything AMP and current clients were urging me to leave. AMP’s reputation will never be restored. Last weeks invite to shareholders to invest in more shares is laughable.
AMP have the right to change the BOLR to a more market orientated price assuming they following the contracted terms (which is subject to dispute) but they also have an obligation to people who have borrowed from them to purchase a very ordinary client book off them at 4 times (I expected it to be awful but it was another level of bad). In some cases they are taking people’s houses and in all cases that I know of they are basically eliminating years of hard work and then imposing a 3 year restraint of trade. I’m all for market rates being paid but do so on an overall basis (ie) a reasonable restraint and more importantly look after those that they have previously ripped off due to their unconscionable and deliberate conduct which was based upon their misuse of market power in the transactions that AMP have benefited from as part of their then corporate strategy. I fail to take any comfort from the words given to me to date that things will be “considered” and looked at on a “best endeavours basis” given that the contract I am being asked to sign states that a 3 year restraint of trade will apply to the finance industry and that my loan to them needs to be repaid in full – in other words the company which has financially violated me three times (original purchase, this change and another change to BOLR since I bought in) in less than 5 years is asking me to trust them.
It really leaves a lot to the imagination where, you buy an asset for 4X under the belief that it can be resold back at the same price, all change. AMP have really proven how bad they are as an organization. Talk about Ethics training, i think the whole of the leadership group of AMP should be tested.
It is disgraceful where an asset in recent times, has been sold with an agreed buyback price that all of a sudden changes…. AND… YOU DO NOT own the asset, unconscionable conduct ? Absolutely, and if that was an IFA then it would be closed down along with a tidy 4-5 year ban. Disgraceful conduct.
AMP advisers complaining the value of their business has just been cut in half. About time you joined the rest of us in the real world
Lets get Jack Regan back out of retirement to rewrite the BOLR policy… hahaha!
Let’s see what the association does, has been banging on about a class action for over 12 months. Let’s see what the chair and the board do? All toothless IMHO. Loads of roar and no action. Feel sorry for AMP advisers.
BOLR has to go along with institutional ownership as these are steeped in conflict. The AMPFPA are only interested in maintaining their own existence and as such they support AMP and BOLR and institutional ownership. At this point in time, the AMPFPA have proven themselves ineffective and irrelevant. Sadly, the flaccid approach by the AMPFPA and the cushy relationship between AMP and the regulators has resulted in awful outcomes for planners and their clients.
AMP will continue to do as they like to planners and the AMPFPA will continue to do nothing.
Everyone has forgotten that many AMP Advisers paid (borrowed) 4 times for getting in. That’s why BOLR is there on the way out.
Too many of you are forgetting that the amp advisers had to buy in at 4X, and were told by amp that’s why the 4X on sale would be honored.
i feel sorry for the advisers who actually plan on staying with them, somehow thinking they are best of breed these guys are totally stuffed, locked in to a useless expensive franchise agreement
Ordinary at best AMP. But what do we expect with a banker at the helm who has no idea about advice and what an adviser is about. AMP (Aint My Problem) will blow themselves up soon. The association is a toothless tiger and should just go away and retire in the corner along with the fat cats on the board.
If you’re being underwritten at 4 times your clients are getting screwed over somewhere in the value chain.
Market rates are 2-2.5 times. If you believe you are entitled to 4 times you DO NOT have your client’s best interests at heart because they are paying for it through inflated product prices. The money has to come from somewhere – there’s only one bucket of money and it is the client’s. It is that simple.
By all means keep kicking AMP if it makes you feel good. But everyone needs to step back and take a more balanced and commercial look at this. The bad first. Yes AMP is altering, quickly, the terms of BOLR and that’s going to hurt a few AMP advisers. But in a commercial world AMP should have done this years ago. Clients are not going to be disadvantaged by this because they will just find another adviser – clients change adviser everyday of the week and no adviser has a monopoly on quality and service. Most of the 4X BOLR advisers are the rusted on AMP advisers who have been “playing the BOLR rules” and getting as many clients as possible into the 4X group. They all knew that 4X wasn’t commercial but if the contract offered why not milk it for what it was worth. The loudest complainers I suggest are the advisers who were using BOLR as their super – I don’t really have a problem with that – but as with any market product values change. Of course AMP could have set up a “statutory fund” to underwrite the advisers “super” but who would pay for that? The clients?
If one of the complaining advisers took their AMP heavy investment and insurance book to market they would be very lucky to get 2.5X. Any of these AMP advisers, and a lot of them are excellent advisers, could have left AMP years ago but they didn’t because they knew how good a deal they were on – and that’s not only the BOLR stuff. And whilst technically their clients were AMPs they weren’t in reality because the client could move when ever they wanted. The braver, more confident advisers, who left had no problems with the so called “lock in”. 6 or 12 month non compete clauses were just an annoyance rather than a real problem.
Apologies to the good AMP advisers, including all those who came through Horizons, but there’s too much selfishness being shown here.
Amazing how they can change the rules and still expect to have the advisers they want in the network locked in at a much lower multiple. These advisers that can and want to move out of the toxic AMPFP environment should be given the option to do so with no fuss and no strings attached; and of course be able to take all their clients with them. AMP Lawyers should be given a lesson on Unfair Contract Act!
Advisers are always on the wrong end of the stick!!!!!!
I have sympathy for these change of business terms but AMP advisers are still on a good deal. If you compare the running costs of a non aligned adviser to the running costs of an AMP adviser it’s chalk and cheese. It’s a Heavily subsidised business model they’ve got. Also consider AMP with the help of their FPA have even made it impossible to state you’re independently owned by an institution and yet an AMP firm can trade under a white label operation and on page 200 of an FSG in small writing put a very tiny logo. Yet I’m competing with that same firm on Google and the advertising budget of AMP. Recently an AMP adviser told me he’s now referring himself as being independent to clients because he could select a non AMP product and “we’re not like we’re used to be” despite a 200 page FSG disclosing relationships and benefits and an APL based on shelf space fees and who pays AMP the most. AMP advisers have so many on the “register” that even despite AMP’s sins clients are still walking in the door but as a non-aligned adviser our phone goes silent and we’re tarnished as the worst advisers. At least at 2.5 times multiple you’ve got certainty that you can sell. No other adviser has that claim. Just remember if you do a deal with the Devil than…..
I guess the FPA will be helping AMP advisers. Oh wait they get monies from AMP Financial Planning so yeah it’s a conflict of interest here isn’t it? I guess this lack of leadership, lack of representation, this lack of clarity as to whom and what they represent is why Ordinary Australians can’t afford advice and why we’re so over regulated in the first place. I tell you there is only one thing that you can control as an adviser and that asking industry associations to put the needs of advisers and Australians first and knock back these kickbacks.
$11.7 million reasons in cash and shares as a sign on carrot and an additional incentive or earning another $6 million if the AMP share price was to reach $5.25 was enough incentive for De Ferrari to get stuck into being a “change agent “.
An interesting prospect and attitude from one who previously worked in India building houses for lepers and worked with Mother Theresa !
Charity starts at home…..but not this home.
The model should have been updated 20 years ago, and managed with empathy.
Seriously why did AMP hire a “Change Agent”? WTF is a Change Agent? He is an ex-banker with no experience in the Australian Financial Planning Industry.
” A certain enemy in uncertain times “.
What a disgrace this organisation has become.
De Ferrari referring to a sense of purpose and the Amicus statue is simply a joke.
What a mess.
Remove vertical integration completely. Let AMP wither or survive on its product and service merits rather than its adviser network which will always be compromised/conflicted. All advisers to be self licensed or through some other system that does not involve product/service manufacturers and where there is no opportunity for conflict. My GP isn’t licensed by Pfizer, my accountant isn’t licensed by Zero or MYOB and my solicitor isn’t licensed by CCH or some other product or service provider. End of story. Stuff ASIC. Just make it work.
[quote=Customer]Every single one of these organisations were better as mutual’s and not shareholder driven entities where the first responsibility lies to so many that have no interest in an organisation other than to deliver dividends and growth.
The demutualisation of these companies including Colonial, AXA, AMP etc etc have really proven to be a failure.
As a mutual the ” shareholders” are the insurance policy owners and the investment and superannuation clients….not external punters and large corporate investors that have no direct connection to the company itself.
It has entirely altered the nature of the relationship between the organisation and the people who work hard to service and advise their clients but also who are loyal and committed to the organisation.
The relationship changed from one of reasoned respect by both parties to one of a means to an end by the controlling entity.
This may sound like a retrospective and a comment from someone who looks at the past through a soft focus lens.
This is not the case at all as all was not perfect then too, but the gradual fracturing of this relationship through the change in corporate structure has resulted in a lack of consideration and respect to those who have assisted in creating and building the wealth of these organisations over many years.
For many, it has destroyed any level of trust they may have had in the organisation they had dedicated so much of their career to supporting.
Whilst business is business, AMP are simply destroying any remaining level of respect both on a public and internal basis………. but perhaps they simply don’t really care enough.
[/quote]very well said Customer you are 110% correct thank you
What concerns me about all of this going on at AMP is that Advisers and Stafff may lose their lives due to depression and suicide ( I understand that some have already suicided) who will be held accountable for the human sacrifice? All for increasing the shareholder value, the borad the CEO the Royal commission, ASIC should have done a lot more than just an enforceable undertaking. Yes this is the elephant in the room the cost to Families, Husbands and Wives and children all because of very poor decisions made in the past and present by AMP.
god forbid that AMP drop the institutional ownership or allow a departing planner to continue working. What will happen outflows? AMP had no problems canning Genesys and IPAC, and launching AMP advice after spending hundreds of millions. Its pretty clear that AMP is being lined up for sale once they solve the advice “thorn”.
Buyer of LAST resort, yeah right…. more like buyer of ONLY resort as they can vet and cancel a sale if they don’t like it. Now that they are at market value for the clients, would be interesting to see their restraint tested in court. Given, you can’t service your previous clients due to the restrictions, but I fail to see how they can restrain you from working in Financial Services, I expect that would be thrown out by the courts.
Pretty simple ..Clients can walk themselves.. to another adviser.. they’re not breaking any rules. Think about it..
Nothing new here. Twenty years ago after Mr Trumble hit town, AMP advisers would tell me at ALA functions that BOLR was security and they had been assured it would never change. Like most former mutuals, at AMP there are no insurance people in charge now that understand advisers. The current MBA-equipped mob refuse to acknowledge that their “wealth and reputation ” was generated on the backs of advisers building long term client relationships, who took the capital risk of entering a business where they were not paid for time, but only on policy completion after the responsibility period, and all the rules under which advisers operated favoured the insurers. Some advisers did not understand that you automatically accepted the terms of a new Agency agreement with any new business submitted after the new terms were announced. BOLR even then could be changed on a whim!
I left AMPFP and did not go via BOLR – I just turned my back on them as they did to me. As for the 6 month restriction – that is not the case. The 6 month restriction states that you can’t take business away from AMPFP in that 6 months, maybe the AMPFP association should read the document correctly as they were not even helpful to me during my departure. I continue in the industry and have done so from day 1 of leaving and guess what – in this case the grass is greener on the other side. There is a saying that you can’t have an argument if there is only 1 person, there must be 2 people to have an argument. Likewise AMPFP can’t be active in the advice sector if it has no planners. They should walk out and let the organisation hang. Actually they don’t need our help to hang themselves as the organisation is doing a good job at that themselves 🙂 Enjoying life after AMPFP
Every single one of these organisations were better as mutual’s and not shareholder driven entities where the first responsibility lies to so many that have no interest in an organisation other than to deliver dividends and growth.
The demutualisation of these companies including Colonial, AXA, AMP etc etc have really proven to be a failure.
As a mutual the ” shareholders” are the insurance policy owners and the investment and superannuation clients….not external punters and large corporate investors that have no direct connection to the company itself.
It has entirely altered the nature of the relationship between the organisation and the people who work hard to service and advise their clients but also who are loyal and committed to the organisation.
The relationship changed from one of reasoned respect by both parties to one of a means to an end by the controlling entity.
This may sound like a retrospective and a comment from someone who looks at the past through a soft focus lens.
This is not the case at all as all was not perfect then too, but the gradual fracturing of this relationship through the change in corporate structure has resulted in a lack of consideration and respect to those who have assisted in creating and building the wealth of these organisations over many years.
For many, it has destroyed any level of trust they may have had in the organisation they had dedicated so much of their career to supporting.
Whilst business is business, AMP are simply destroying any remaining level of respect both on a public and internal basis………. but perhaps they simply don’t really care enough.
Doesn’t AMP understand it needs distribution to grow and advisers to retain their existing customers ? The key questions the shareholders should be asking the CEO are :How will you stop the bleeding of customers ? How will you grow the number of customers ? If the bleeding continues and we do not attract new customers what is the future of our share price ? What cost have you saved by dropping the BOLR from 4 to 2.5 times. How does that cost compare to the damage you will inflict on the share price ?
No one in the market place will get 4 times to sell their financial planning business. It was irresponsible for AMP to even contemplate / entertain or set exceptions that this would occur. BOLR stands for buyer of last resort not buyer of first choice. How can AMP set up advisers to think they could simply exercise BOLR when ready to give it all away and, AMP advisers were never allowed to leave and join another AFSL and take their clients with them. If stood firm on that via their adviser agreement, this must have been due to the BOLR rules / agreement that were put in place that locked adviser into AMP. AMP you can’t have your cake and eat it! AMP you threw everything at your adviser to lock them in and then to try and change the rules you structured simply because you have now realised that 4 times in not the market rate. Well guess what? it never was and you still went down that path locking in and promoting BOLR to all your advisers regardless. Everyone knows the game you were playing in the industry as adviser could never leave to the BOLR deal that was structured for them to keep them captive.
[i]”advisers authorised by AMP FP are generally unable to take their clients if they cease being authorised by AMPFP”[/i][i][/i]
And there’s the rub. That restriction is why advisers authorised by AMP FP were guaranteed an above market BOLR rate of 4x in the first place. How can AMP suddenly reduce the BOLR rate, without removing the client ownership restriction? De Ferrari is proving to be just as duplicitous and shonky as his predecessors. That Amicus statue in AMP head office must cast an evil spell over all who gaze upon it.
In addition AMP has decided to change the VPS / DMA payments over the next 3 years to 90%, 60% and 30% with claw backs. Grandfathered commissions to cease as from 1/1/20. Both will have a major impact to the Bolr payments. As well AMP are now auditing all advisers and requesting 45 files with a 5% fail rate. If you fail they will go back through your inter customer base and can in fact reduce the BOLR payout. AMP is a complete mess and a disgrace to the community.
Amazing Dover gets their license cancelled yet this is allowed to go on like this. I am not going to defend Dover, but is a ‘client protection policy’ really worse than this?
Even more amazing is how silent the FPA are… Then again they don’t want to bite the hand that feeds them.
AMP is an absolute clown show. I feel very sorry for the advisers caught up in this mess, as it’s obvious AMP do not give a s**t about them.