EXCLUSIVE Hundreds of AMP financial planners have received a termination letter from the company as it looks to cut a significant portion of its network.
Earlier this month, AMP announced that it would be reducing its adviser network and devaluing aligned practices under its buyer of last resort (BOLR) arrangements by 37.5 per cent.
In recent weeks, AMP advisers received a letter from Brian George, managing director of AMP Financial Planning, which outlines the five options advisers have to leave the group. One of those options is to do nothing. Those who choose to take no action will have their authorisation and contractual agreements terminated within 180 days.
One option is for AMP advisers to exercise their BOLR rights and sell their business back to AMP for 37.5 per cent less than they were initially promised.
Advisers also have the option of taking a “one-off offer” buy-back arrangement that replaces all rights practices have to a BOLR payment under the policy.
The letter, seen by ifa, notes that “the practice and the practice principal must keep confidential all information about the one-off offer, including this document, the settlement agreement and the exit terms and must not disclose, nor allow a third party to disclose, to any person such information unless such disclosure is approved by AMPFP, required by law or to legal or accounting advisers on a needs to know basis”.
Advisers have also been given the option of securing appointment as an authorised representative of another Australian Financial Services (AFS) Licensee and apply to AMPFP for the release of client institutional ownership terms.
Finally, they can join or merge with another AMP practice or sell their client register rights to another AMP practice.
In the letter, Mr George explains that the financial advice industry is experiencing “significant disruption”.
“Increasing regulatory scrutiny, rising education and professional standards continue to place unprecedented pressure on advice businesses,” the letter states.
“As part of a review of AMP’s strategy in the advice business, AMP has undertaken a review of its advice practices across the AMP financial planning network. Unfortunately, AMP has determined that your practice does not align to this strategy.
“As a result, AMP Financial Planning Pty Limited (AMPFP) has made the difficult decision to terminate your corporate and individual authorised representative status. AMPFP has made this decision because your practice does not meet the thresholds that we have set under AMP’s future strategy.”
A number of AMP advisers remain in debt to AMP Bank, which funded their acquisition of orphaned client books. Records show that advisers across the network owe between $400 million and $500 million to the bank.
More to come.
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