The appointment of David Murray as AMP chairman shows just how out of touch the institutions have become.
In the much-loved Hollywood blockbuster Shawshank Redemption, Morgan Freeman’s character ‘Red’ describes his fellow inmates as having become “institutionalised”.
It is increasingly clear that many financial services executives are experiencing the same condition.
AMP has announced the appointment of David Murray as its next chair, tasked with “rebuilding public confidence” in the company following multiple revelations of potentially criminal misconduct via the royal commission.
Current executive chairman Mike Wilkins heralded the appointment as a positive and pointed to Mr Murray’s “outstanding calibre” and “strong risk mindset”.
He couldn’t be more wrong.
David Murray was chief executive of the Commonwealth Bank of Australia from 1992 to 2005. As a reminder (and hopefully an unnecessary one) that is the organisation described by counsel assisting the royal commission as the “gold medal” offender.
That is also the period in which the the bank was handing out large sacks of shareholder money to acquire formerly-independent dealer groups and attempting to turn them into vehicles for financial product distribution.
Mr Murray is not just associated with the kind of problematic vertical integration that has been questioned by the royal commission – he is synonymous with it.
He also chaired the Abbott government’s Financial System Inquiry – the one that essentially said misconduct in the financial system was not systemic and that there’s ‘nothing to see here’. The inquiry recommended against greater disclosure of “restricted” financial advice models or reform of the vertically integrated model.
Had it done its job properly, arguably there wouldn’t have been a royal commission and the industry could be on its way to happier times, rather than wallowing in its current post-RC malaise.
For these two reasons alone, Mr Murray is an entirely inappropriate – if not downright offensive – choice to clean up AMP’s mess.
His appointment is so unbelievably tone deaf that a consumer or investor would be forgiven for thinking AMP is actually trying to piss them off, rather than implement damage control.
So how on earth does it happen?
ifa does not believe the company is trying to deliberately aggravate readers or create this kind of press response (indeed it is likely desperate for the opposite).
The problem is that the executives making these kinds of decisions are so mind-blowingly but genuinely out of touch that they actually think this is a good idea.
People in the upper echelons of AMP (and likely its competitors) must actually have a positive perception of Mr Murray and his career.
‘He has experience’, ‘he understands the law’, ‘he led CBA to great profitability’, these well-heeled geniuses must be thinking.
But little do they realise that out in the real world beyond the harbourview glass tower, the perspective is very different.
To the IFA community (you know, the one AMP will soon be reliant on for distribution if its adviser numbers continue to plummet) Mr Murray is symbolic of a period of leadership that almost ruined the industry and of the kinds of deals that saw them coercively placed in a distribution chain and turned into salespeople against their will.
To the general public, he symbolises the kind of rich banker that is ultimately to blame for the culture leading to misconduct and for their all-but-evaporated trust in professional finance.
AMP is not the only one suffering from the syndrome.
We saw it also in CBA’s decision to appoint an internal executive, Matt Comyn, as its next CEO despite the obvious problem with its internal culture. We saw it also in CBA executive Marianne Perkovic’s disturbing attitude before the royal commission that the bank actually hasn’t done anything wrong.
Financial institutions worldwide are suffering from a particularly destructive form of ‘echo chamber elitism’ whereby they have become so removed from the world of their consumers that they can no longer service them effectively – much like their federal government ‘frenemies’.
They hang out at the same golf clubs and charity events, attend the same MBA courses and management consulting Kool-Aid sessions, and count the same fat packets on pay day.
Like ‘La Cosa Nostra’, they seem only to trust insiders when insiders are precisely the ones they should fear the most.
Mr Murray is no doubt qualified on paper to execute his current task and is surely taking the royal commission evidence seriously. He may ultimately surprise us and force the cultural change required.
But on face value his appointment reeks of the cronyism and corruption the royal commission is uncovering, and an unlikely enabler on the road to redemption.
Former NSW adviser banned following conviction
BREAKING ASIC has permanently banned a former NSW-based financial adviser follow...
Westpac brings in new ‘battle-hardened’ chairman
Westpac has appointed a successor to replace outgoing chairman Lindsay Maxsted. ...
Advice in ‘flux’: HLB Mann Judd
It’s the best of times and the worst of times for financial advisers, with ind...