The troubled financial services giant has taken the road less travelled by merging its bank and wealth businesses.
AMP’s announcement on Thursday (10 October) that its wealth and banking business will merge under a new group called AMP Australia goes against the industry trend. Most banks are demerging their wealth arms or selling them off altogether. But not AMP. The group clearly has plans to leverage its famous vertically integrated model for many years to come.
Unlike the majors, AMP has no physical branch network. It’s financial advisers, many of whom have been badly spurned by the group, have been its primary distribution channel for decades. AMP advisers have even written up to 25 per cent of the bank’s mortgages in recent years, with the rest coming through the mortgage broker channel.
AMP CEO Francesco De Ferrari said the decision to combine banking and wealth management reflects the group’s “client-led strategy”, which raises the question: what was its strategy before?
The new AMP Australia business will be led by De Ferrari’s fellow Credit Suisse alumni Alex Wade, who was previously heading up wealth management. AMP bank will be run by Rod Finch, who is currently MD of wealth products and platforms.
No appointments were announced for the wealth side of “AMP Australia”, but an AMP spokesperson confirmed that Mr Wade will still be the key person for the wealth business.
Meanwhile, SuperConcepts CEO Lara Bourguignon will take on additional responsibilities as the managing director of superannuation, retirement and platforms.
The realigned AMP Australia business is clearly part of the group’s bold strategy to try and bring financial advice to the masses via some sort of digital offering, the details of which remain unclear.
According to Mr Wade, who spoke to ifa about the group’s new wealth strategy, AMP is trying to bring more advice to more Australians via multiple channels.
The group has promised to invest $500 million in advice over the next three years. A good chunk of that will be spent on technology.
No Australian company has been able to successfully deliver a digital advice offering that has been embraced by the mass market. But AMP believes it can do just that.
The company's brand has been badly bruised by a series of scandals in recent years. Its new advice strategy has triggered an ugly backlash from advisers that have already been given termination letters.
It would have been much easier for AMP to follow its big four peers and divest its wealth management business; sell it off and consolidate AMP Bank and AMP Capital. To its credit, the group is walking through the fire and trying to save the troubled wealth division.
But again, we come back to distribution. The big four have it and AMP does not. Whether or not a digital strategy can save the group’s advice business remains to be seen. Interestingly, there were no new roles announced for digital in this week’s announcement.
Nevertheless, AMP appears to be moving on with its plans pretty quickly. No mention had been made about the hundreds of advisers who received termination letters form the group. Many of whom will be out of work and heavily in debt to ‘AMP Australia’ by the end of the month.
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