In a letter to ASIC chairman James Shipton, Ms O’Neill expressed concern about AMP’s decision to reduce its BOLR guaranteed value from four times annual revenue to 2.5 times annual revenue and asked that ASIC “immediately commence an investigation into this matter”.
“The decision has drastically devalued the businesses of many financial advisors,” Ms O’Neill wrote. “This was also applied retroactively to many planners who had purchased client books in good faith with this guarantee.”
AMP also issued notices of termination to an estimated 250 planners that were deemed “lower profitability”, forcing them to sell their business for less than one-tenth of what they were worth before the changes. The Australian Small Business and Family Enterprise Ombudsman has received over a hundred complaints from advisers affiliated with AMP due to those actions.
Ms O’Neill has requested that ASIC prepare a full report for the joint committee on corporations and financial services oversight hearings on 13 July.
Last year’s changes to the BOLR sparked a bloody war of words between AMP and its advisers as the wealth giant struggled to turn its reputation around in the aftermath of the shocking revelations of the royal commission.
“Placing an obsessive focus on shareholders ahead of clients is what got AMP into this mess in the first place,” an anonymous AMP adviser told ifa last year. “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 was not contacted for comment on this article.
I left AMP nearly 15 years ago and never looked back. To be fair, I am thankful as they gave me a good start into the profession and at the time, reasonable training however within 5 years I could see the writing on the wall regarding how they operated and treated planners versus being a true professional and having an IFA business. Best move I ever made.
This may sound harsh but also have to admit that a number of the ‘old’ AMP planners were the laziest most self-serving people in our industry (not all, but definitely the majority in the regional area I started) and while they would continually whine about AMP, never had the intestinal fortitude to attempt to break away, so tbh I have very little pity if their cosy BOLR is now taken away.
Not meaning to sound negative but the rest of us have to rely on how good our business is if we want either finance or to sell, and while I agree it is wrong how AMP handled this, the commercial reality is that it always had to happen at some time.
Interesting if they were still selling old books of business at 4x and when did that stop most likely a day before they announced they wouldn’t be paying 4x’s anymore
you know all this CPD training we have to do – a large component of that is an ethics obligation – at every level the senior management fail to act with honesty, fairness and integrity – then for the life of me under the FASEA code have they not breached the responsibilities as a participant in the industry – and why cant they be sanctioned. Every principle of integrity and decency have been avoided by the management. For mine I would lock a few of the senior management up – stick em in jail – maybe that would crack their consciousness.
Hello…….yes….I would like to speak with a Mr. Francesco de Ferrari regarding his salary package please……….. …..hello…hello…..beeeeeeeeeeeeeeeeeep .
The FPA will look after you.
Hopefully Ms O’Neil can include IOOF in her letter to ASIC given the little consideration and emotional stress they have caused to their once loyal Bridges financial planners who have/are BOLRing their businesses.
I don’t understand why these new AMP planners don’t just take their clients and move elsewhere. Hasn’t AMP freed up the client ownership restrictions as part of the BOLR changes?
Surely new planners that joined the industry and purchased clients, did so with a view to making a long term career? BOLR is only supposed to be for people who are retiring. Why does the current retiree buy back price matter for new planners?
How many new planners have been appointed in the last 3 years and how many of those have been new AMP planners ??
The only reason anyone ever joined the AMP dealer group was the BOLR. That was their main selling point. The fact that they sold their advisers existing client books at 4 times revenue then say that they are only going to buy those same clients back at 2.5 times is a disgrace. How can anyone ever trust anything AMP say ever again. This company needs to be wound up and all the executives banned from being in financial services ever again.
I was never an AMP alligned adviser however i feel sorry for all those who were tricked by this evil enterprise and that AMP knowingly destroyed your lives.
I looked at AMP about 5+ years ago and could see there were holes in the ‘guarantee’, which it isn’t – Fees were starting to replace Commissions then and the writing was on the wall. How anyone would buy at 4x in recent years is beyond me (Caveat Emptor). PS – How can I get some compensation for the commissions being turned off with (non-AMP) products I bought? Most Advisers have copped a drop in valuations and I think at 2.5x I’d probably take the $ from AMP and run, if I was with them. Thankfully I’m not.
I was an AMP planner and I have nothing but regret for the time I wasted in this organization.
Hmmm, well where were you Senator when FASEA was thrust upon us, where were you when the education standards and exams were thrust upon us, this is also having a devastating affect on Advisers, their practices and valuations, families are losing their homes because they spend too much time trying to tick every box! I feel for the AMP Advisers but I also feel for the thousands of Advisers who are leaving our Industry and the many tens of thousands of clients who now will not get any advice. Consumers are losing out, thanks to uneducated Government officials who were fed the rubbish from ASIC, rubbish from our so called representative associations. Now we find out that ASIC had its paws all over FASEA standards but then say “this is what we want, but don’t “attribute anything to us”, because we don’t want everyone to know we were involved””………..oh so that is ethical is it?? Give me a break!!!!
35% of Advisers will leave the Industry by January 2022 and 50% will be gone by January 2026. Well done Senator, well done.
And where is this senator calling for ASIC to investigate how poorly Deloittes (ASIC employed to be the official auditors for the ‘fee for no service’ look back reviews) are conducting the review of client files. I know of numerous instants where sufficient evidence has been provided yet Deloittes state otherwise. When you try to consult with them you get told ‘they are not getting into the semantics’……
Same deal applies to advisers that purchased ”grandfathered revenue” over the past 3-4 years…at the time this was a saleable asset. Now these advisers have no asset and possibly a debt to service!! Well done Mr Hayne….maybe Senator O’Neill can include this matter in her referral to ASIC as they, according to many fund managers, are the reason this revenue is being removed pre-December 2020 recommendation from RC.
This has produced same result for Advisers impacted, significant business valuation reduction!!
Hang on a moment. The people who bought those client books made a business investment decision. All business investments are risky. They usually require an element of effort and enterprise to turn them into a success. Enterprising purchasers of grandfathered revenue clients would have converted those clients to fee for service, and then upsold them a to a broader range of products and services.
It seems a lot of people who have purchased client books seem to think they should behave like term deposits. Just sit back and collect a reliable income stream for a few years, then get your initial investment back in full. Sorry, but business investments don’t work like that.
Exactly the reason I never bought any of these ‘grandfathered’ books when offered the chance. You pay your money, you take your chances.
The whole notion of FOFA was backwards. It should’ve been these trail books that were forced to advise commissions received each year, not the clients where the fees can be seen on your statement each month. But that’s what you get with policiticians and regulators who know little about what they are regulating….
I bought some trail clients, but at less than 3 times and knew the risks. But turning them off 6 months early did hurt a bit, though.
Really feel for some quality planners I know who have been affected by this. Valuations slashed and untenable audits have left them an emotional wreck.
Good to see as the financial institutions determine their moral compass by reference to eachother. ie using what AMP have done to justify their own actions.
#AMP are irrelevant
Yes, Thank you Ms. O’Neill! This train wreck that AMP have caused will tragically get pulled under the carpet by AMP. Lives have been wrecked due to this greedy position/stance AMP has taken. This is big business stepping on the little guys. Guys & Girls that have tried to support everyday Australians bettering their lives through Best Advice have been crucified by AMP. There has been some bad advice YES by a few but weed these people out, prosecute them & lets get on with helping people because that is what we do!
Finally someone has called this out. Congratulations Senator and thank you. I hope AMP has to pay the BOLR and compensation to all the advisers hurt by their callous disregard for the people who not only made them the 5th pillar financial company, but helped millions of Australian’s along the way.
Well, I think the Politicians have been the cause of most of the devaluation effects by their kneejerk reaction to the Royal Commission. Its more about politics than protection of consumers for them.
WOW!!!!!!!! Thank you Ms. O’Neill! It finally takes a Labour MP to stand up against this wrongdoing by AMP.
It is the principle! Where are the Liberal Party and OUR so called Associations ( FPA & AFA ) on standing up principle and protesting against this wrongdoing!
I am not an AMP adviser – but I would NEVER recommend any AMP product or services based on the dishonest and untruthful way they have treated their own advisers.
Indeed, under the Code of Ethics, I think any adviser would struggle to justify how they can recommend AMP products and services and still comply with the ‘good faith’ requirement of Standard 9.
Amazing what a $60,000 payment from a product manufacturer will buy you each year. You obviously don’t know what the Professional Partner Program is about. The dirty little secret of the FPA.
AMP have caused so much pain across it’s financial planners. They have treated small businesses with contempt with no care or consideration to their mental and financial wellbeing. There are a disgusting organisation.
i agree i was a Hillross advisor and was treated as if I was a criminal by AMP even though they kept telling me I was one of the good guys. I sacked Hillross/AMP as my dealer group in Feb 2019 and was finally released from their register on the 4th November. Ironic I wanted to leave and was prevented for so long yet those that wanted to stay were booted out
That is true. What have AMP advisers done to their clients? AMP funds have been underperforming and expensive for many years.
No that is not true. That is a falsehood perpetuated by the union funds and slavishly regurgitated by lazy “journalists”.
There are some AMP funds from last century that are expensive and poor performers. These are the “retail” funds the union funds compare themselves to in their deceptive “compare the pair” ads. But AMP’s more modern funds are not significantly different to their competitors with a like to like asset allocation. If you compared a 20th century mobile phone or computer to a modern one you’d be unhappy with it’s performance too.
AMP’s big mistake was not shutting down or automatically upgrading their older funds, which date from the earlier days of superannuation.
Having done everything that was required of me, I was almost audited out of existence by the maniacs at AMP. They contacted clients without my knowledge until the clients themselves rang me to say what had happened. AMP inferred wrong doing on my part when there was none. They have demonstrated abject incompetence at every turn. I left Charter licensee only to be slugged with an $18,000 rollout PI premium to cover them in case someone made a complaint in the next 7 years even though we have never had a complaint in 20 years. AMP are the worst of everything in corporate Australia. I hope they get bought out and the brand retired. They cannot recover from the disgraceful manner they have treated their advisers. Just a rubbish organisation.