Yesterday, AMP released its latest financial results, unveiling first half net profit of $445 million and wealth management business operating earnings of $193 million, down 1 per cent on the corresponding period.
In a report issued last night recommending investors hold AMP shares, Morningstar analysts pointed to AMP’s vertically integrated structure and in-house distribution as key shareholder benefits.
“AMP uses its captive financial adviser network to sell a wide range of AMP investment and risk insurance products,” the report states. “[AMP] now boasts approximately 3,800 advisers, providing a very effective distribution capability for AMP-owned products.”
At the same time, however, the researchers argue that the fiduciary rule implicit in FOFA may see this competitive advantage diminished in the long-term.
“A regulatory requirement for financial advisers to operate in their clients’ best interests could threaten AMP’s success in selling a large proportion of AMP products to their clients,” the report states. “Despite the business impact, AMP continues to support the Future of Financial Advice reforms.”
The report also suggests that increased growth in AMP’s advice channels could ignite recruitment activity and customer acquisition.
“The larger and more successful the AMP adviser network becomes, the more interest independent and non-aligned planners have in joining the AMP group,” the analysts assert.
“The network effect gains momentum, increasing customer numbers, demand for AMP products and, crucially, funds under management.”
The analysis comes despite a reduction of 14 per cent in adviser numbers across the AMP network in 2016, down to 3,519 as at February 2017 from 4,091 at the same time the year before.
As a former amp authorised rep, captive is a apt description. Because when i describe my move away…i call it an escape. I dont think prospects of amp realise, that all the clients you bring to your business, are legally amp’s. Every…single…one!
The AMP BOLR provides an exit strategy for those who have a consideration to do so. Round numbers the market will pay 3 times revenue, for a non-aligned advisory business and AMP will pay 4 times BOLR for the vertically integrated under their banner.
The conflict between Best Interest Duty and Buyer Of Last Resort will probably take years to play out.
What a loaded of rubbish. I’ve been a an AMP planner of over 30 years and BID is the first area the Auditors review. Over the past several years we have place more business with other providers than AMP, and so do all the other planners. Get your facts right, before you make false statements.
As an adviser within the AMP license network my only advice to anyone tossing up whether to join is — don’t
Apparently, if you’re big enough, the “best interests duty” can be phased in over time.
The feeling is mutual.
Many advisers prefer the benefits of an Insti over being an Indie.
What is right for one is not for another…
morningstar completely out of touch. No IFA in their right mind would join amp!
Damn straight. AMP represent everything IFAs detest.