Former AMP firm rejects vertical integration

Speaking to ifa, Aspirations director Michael Barker announced the business has left the Charter licensee and obtained an AFSL.

Aspirations came to be licensed by Charter following the collapse of AMP's Genesys dealer group – first reported by ifa – which became part of the AMP network via the 2011 merger between the major institution and rival AXA.

Mr Barker said his firm was one of a number of Genesys member firms that never fit neatly within AMP's dealer group culture.

“AMP never wanted the Genesys brand, and Genesys never really wanted AMP, we just woke up one morning and were in bed together, and that’s not really what either party wanted,” Mr Barker said.

“Everyone was very open about that, and a lot of the Genesys advisers with their ‘independent’ mindsets didn’t really fit into that model."

When AMP decided to "rationalise" the Genesys business following a "strategic review", Aspirations was one of a number of practices who stayed within the AMP network, saying the institution made it "very easy" for member firms to transition to other aligned licensees.

However, Mr Barker ultimately decided to leave the network, explaining that he and his staff “don’t necessarily like the vertically integrated model”, and will now be aiming to “strip out as much conflict as possible” by avoiding working with large institutions where possible.

“We intend to have very little association with institutions, so some other self-licensed businesses have gone down the path of getting support from large institutions, we took the view that going to be a bespoke boutique business, therefore we’re going to associate ourselves with other like-minded individuals,” he said.

AMP is the first of the institutions to appear before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry next week to discuss "fees for no service" conduct and the operations of its dealer group network.

Commenting on the upcoming hearings, Mr Barker said vertical integration and fee for no service are likely to present challenges for AMP and the other institutions.

“AMP certainly will have problems come to light, nothing that I know in detail, but I would expect you are going to find issues particularly around a couple of key areas, one being the usage of own products and all that traditional vertical integration business,” he said.

“The second thing I think will come up is what we call fee-for-no-advice; those two will probably be the big areas that come up.”

In the wake of Genesys's closure, ifa predicted mass exodus from the AMP network and similar organisations from leading practices seeking greater independence.