Speaking at the Morningstar Individual Investor Conference in Sydney last week, Mr de Ferrari told the largely investor audience that it needs to enable a different way of providing advice to customers as part of the restructure of its wealth management business.
He said it would take at least three years to “re-position the business”.
“That’s where we need to work on transforming some of the DNA – improving our execution and driving a lot of accountability in how we deliver,” Mr de Ferrari said.
‘Modular’ advice delivery
In particular, he said AMP has been looking into the concept of ‘modular’ advice as a critical element of its restructure, whereby advice is provided only at critical life stages as well as considering whether that advice can be supported through technology.
“If we are honest about making wealth accessible to all Australians, then we have to find another way of delivering it, because face-to-face advice is very expensive. [For someone] on an average of $80,000, they will not be able to afford or shouldn’t pay a full-time adviser on a recurring basis,” Mr de Ferrari said.
“[We’ll look at] how we use technology and how we move effectively towards a more episodic advice where it’s clear to me that one size doesn’t fit all, and where we need to give clients the opportunity to buy and pay for advice when and how they need it.”
Reaching the core of client needs
The other critical element, according to Mr de Ferrari, was around getting to the core of client needs rather than simply selling products.
“I find it very interesting that when I hear people talk about wealth, they normally they talk about superannuation and how they’re investing that piece of your wealth for their retirement,” he said.
“Actually, that is not the real question. It’s very hard to talk about retirement but only talk about super. Because as you see, superannuation is only 18 per cent of your money on average in Australia.
“All of a sudden you’re trying to build a company around client needs, you realise that actually just focusing on super is not going to be enough. You really have to look at what’s the overall picture and where effectively does advice help.”
Is this for real?
How can the leader of the largest advice network say that the average person shouldn’t pay for advice?
Is it possible that he has absolutely no idea what he is doing?!
Could he be an industry super mole?
He is actively working to destroy the whole AMP network…not just those earning less than $300,000.
In fact, what he has done has begun an AMP extinction event.
Many Great comments in this thread and normally, i would be saddened to this. The reality is that supposed leaders are destroying the industry and and their own company by stupidity and poor understanding. With Billy’s comment below, forgive him for he not know what he says and possibly hasn’t built strong advise relationships for decades. He has no solution for the poorer people getting help for he is just inexperienced. We stopped taking new clients over a year ago and I look forward to spend more times with my children and having no further worries over my clients, Ferrari gives me great comfort in knowing they don’t need personal advice. Door closing asap. AMP reminds me of Kodak. Thats sad.
And on another point, I support the AFA and they have been active and could do better, but ive not bothered with FPA and dont see any values etc i have to pay to retain CFP status which all will be irrelevant soon. I just seen them as extortion with each fee just to be CFP. They dont answer emails, they provide a 1800 or is a 1300 thats not connected (in the past). On so many things they have failed us. AFA conferences were some of the best in the industry but for those who missed Perennial Invest 10 or 11 or etc, they were truly valued one day events that none other equaled.
gee the ethics course is working well when the majority of people on these forums believe trail commission should be retained and that it is OK to charge a monthly fee but see a client once a year for a useless tick and flick annual review.
Start doing some actual work for your clients and bill them by the hour from their bank account, not from the product, provide transparent advice, if they dont require a regular review (ie – full age pension clients) turn off the fees and again charge them by the hour.
A lot of FPA / AFA bashing – perhaps from competing membership organisations? Why else would they get 40+ upvotes?
FPA has done a good job in a difficult situation. AFA is now doing a good job. [b]If they merged they could become a helpful combination for advisers. [/b]Even now they are useful.
Has this so called leader read Standard 6 of FASEA. What is this intellectual derelict talking about. Little wonder our industry is a mess with nitwits like this with stupid cooments
“All of a sudden you’re trying to build a company around client needs”
Well Hello AMP, its only taken you 170 years to work out that you should focus your Advice on clients needs.
Incredibly sad old company AMP
Thank god we have AMP to preach to us from the ivory tower! Their business model has always been a pinnacle of the industry after all. I’ll just go and retrieve my tongue from my cheek now.
Isn’t ironic.. a multi million dollar, arrogant banker talking to us about Average Australians? So what exactly is an Average Australian? They must be very intelligent and capable of making their own financial decisions.. that is why we have $$$$ in lost super, $$$$$ under insurance, $$$ in crap retail super funds and basically big, fat corporates (like the one that MrFerrari runs) ripping them off (and not to mention also ripping off their planners).
I think the best advice for Mr Ferrari is to not comment on Mr Average.
fpa / afa are killing advisers.
you will regret it fpa /afa when there are no advisers left to provide advice. they can’t and won’t come back.
If someone form AMP told me it was a sunny day outside, I’d take an umbrella[c[color=olive][/color]olor=olive][/color]
I deal with these “average” people on a daily basis. They are the most labout intensive as they need to juggle mortgage repayments versus super, school fees, insurances etc. NO advice??? Many of them would not have the dicipline to stick to a budget, save for later etc without advice. Clearly Mr Di Ferrari has never been in that position and has no understanding of the value of financial advice. He thinks we only advice re peoples super. He now tries to grow AMP without advisers? Good luck to him. Disgraceful how a company which was built by advisers now gives them another kick in the gut. FPA ,do something about all this negative publicity. The bucket is full.
[quote=Anonymous ]Great to see product manufactures ( & Licensees) using Financial Planners to forward there own conflicts of interest by painting us as the problem (again). I look forward to the FPA unleashing the “Dogs of War” in what I’m sure will be a savage and unrelenting defense of Financial Planners and the need for regular ongoing advice.
there won’t be any defense of financial planners from any corners. not least from the FPA.
but, one commendable aspect of so much heat on us is that our insults are getting zingier and more and more creative.
at least something is positive. and for me personally, as i had done the study required, i was able to cancel my fpa membership at least
so AMP want robot advice more profit before customers
Great to see product manufactures ( & Licensees) using Financial Planners to forward there own conflicts of interest by painting us as the problem (again). I look forward to the FPA unleashing the “Dogs of War” in what I’m sure will be a savage and unrelenting defense of Financial Planners and the need for regular ongoing advice. Based on past performance the reality will be the equivalent to being thrashed by a wet lettuce leaf!! Can you imagine the AMA’s response if the drug companies publicly stated that patients should cease their ongoing health check-ups
[quote=anonymous]asic, fpa, afa, industry super funds, choice, accountants, fasea and the government (under direction from these parties) will not rest until the financial planners are totally destroyed. that’s the truth. can we handle it.[/quote]
yeah i am getting out and getting into butchery. bought a nice little meat butchery. at least i can work in peace without some compliance person poking my nose in or being bad mouthed everyday good luck y’all
Does this man hold any qualifications to provide this advice? And has he properly explored the financial circumstances of those people concerned ? This is Hubris and arrogance
David Murray was the key figure behind de Ferrari’s appointment.
They had both worked with Credit Suisse.
Murray saw de Ferrari as an accomplished ” agent of change ” and according the AFR on 22.08/2018, the AMP board agreed to pay him a sign on fee of $11.7 million in cash and shares and another $6 million if he were to drive up the AMP share price above $5.25.
Do you reckon that his incentive is to slash expenses, increase the bottom line and the share price and get a massive incentive payment for doing so ?……and then leave for the next “challenge” ?
Mr Doh ferrrari should take his ferrari and drive off into the sunset. This is so out of touch with reality. Amp built itself on life risk and super. He wonders why so many people talk about super as its the bulk of amps income. They arent a boutique manager dealing with hnw clients. Know your market ferrari.
Haha this would be like the head of the AMA saying most patients don’t need regular health appointments, Dr Google can treat them virtually and they should only come in when it’s gangrenous! Way to alienate your constituents there buddy.
But Francesco, the guff on your AMP website states the contrary:
“We strongly believe in the value of face-to-face advice for every Australian, and it remains an important part of our business”.
Think your not up to the task.
I think he meant to say any person shouldn’t pay amp for advice.
Anonymous you’re right about behaviours, they are part of the fact finding and recommendation process.
But the issue here is that we have, as an industry, used the behaviours and “I keep you on track” lines far too often. And the big problem is that this is an area that cannot really be quantified and can be abused and in deed has.
The issue is how do you really quantify that discussing values and behaviours every year justifies an on-going fee. It’s just too hard to quantify.
I’m not for a moment suggesting advisers do not add value for a client rather the issue of charging on-going fees and what really justifies that fee.
There are probably a numbers of ways forward but whatever they are they are not going to be the way has been done to date. We have some firms around Australia who have full holistic businesses that, to use your words, actually coach their clients beyond just their money. They don’t just justify their fees by inviting their clients to an annual investor update for example
The solution, I think, is that to offer clients a real value for their fee, if you choose to charge an on-going, is going to require critical mass within the business to be able to afford what is required. And sadly I think the very small “one or two person” outfits are not going to be able to survive. Will the drop out be 70% or as suggested by another contributor 90%? I hope it isn’t but we can’t rely on just pulling down the de Ferrari’s, ASIC, AFA etc if it happens. we know the industry is changing and we need to change with it. The truly good businesses and their advisers will profit – no question.
AMP had the largest amount of low income low balance funds in the country with their dodgy corporate super accounts!!
De Ferrari clearly is not the right man for the job. Maybe, just maybe he should gain some advice experience before he embarrasses himself any further. This is typical of the advice industry. Most of the senior managers of the larger organisations in advice have no relevant experience. Of course he would say that as he has completely alienated advisers, so he needs to somehow bypass the adviser and go straight to the consumer. Tell him he is dreaming. It will be another failed thought bubble.
As a Financial planner for over 20 years, I have helped many clients earning less than $80k, for a fee, to improve where their Super is invested via a well diversified portfolio, & to ensure their insurances are sufficient to protect their loved ones. In the future, if we are to believe Mr De Ferrari, this wont happen to this demographic. They will be the losers. Anon.
Would you expect anything less from a product manufacturer, that has a vertically integrated business model in an environment where clients best interest now must be considered, while being remunerated by shareholders based on the generation of greater profits.
Solution….Remove those who must by law act in the best interest of the client.
Anon 3 – you make good points if behavioural changes are not part of your advice. A good adviser is more like a coach – teams that have no coach do considerably worse than teams that do even though the coach adds “nothing” to the actual game play.
It is [b]behaviour[/b] that determines long term investing success, much more than any other component. [color=green]That is what a good adviser adds value to.[/color]
[quote=anon 3]Well contrary to everyone else I agree with him. The advice industry even now is still based on a decades old model.
The on-line tools that most platforms provide and their call centres are getting better all the time and a “basic adviser” would be hard pressed to show how they can offer any more than what the client can get for free.
The task for advisers is how they accept that the future is definitely going to change how they do business and get remunerated and how they are going to integrate the every growing number of on-line tools and services into their business model.
It’s about making this a true profession.[/quote][quote=anon 3]
what you say is probably right, but that would mean nearly 90% of current advisers would not be able to continue. i have actually said in the past that the cull is going to be more like 70% rather than conservative estimates of 20 to 40%
What a scary age we live in where we have Muppets in charge, not only in Canberra, but at the helm of some of our biggest wealth management institutions. How these people get there, stay there and get paid what they get paid given how inept they all appear to be beggars belief!
asic, fpa, afa, industry super funds, choice, accountants, fasea and the government (under direction from these parties) will not rest until the financial planners are totally destroyed. that’s the truth. can we handle it.
AMP, please! Your advisers well sell their own mothers to meet sales targets. I have more respect for communist than you AMP.
Well contrary to everyone else I agree with him. The advice industry even now is still based on a decades old model. Sure its had some sophistication added and definitely its had much needed compliance requirements added to protect investors. The RC, love it or hate it, started to dig into some questionable practices, legislation and business models.
But the advice delivery industry needs to have a dramatic change to meet the needs of the 21st century public not just another “evolution”. De Ferrari is pretty much on the money. I don’t however really agree that $80k is the right number rather just a line in the sand. I don’t believe there is actually any figure that determines when an on-going fee is justified. The need is based on a client’s situation and complexity of their circumstances etc.
Generalisations are always open for criticism but having looked at 100s of review documents and files I could not honestly justify the on-going fees charged to the client in very many cases. But I counter that I have also seen some excellent review processes where the clients have complex situations and solutions that need genuine on-going maintenance. In the latter, of course a client should say an on-going fee but if, for example, a client is in a simple platform solution with a “model portfolio” supporting it what can an adviser really offer to justify a fee? There’s more to it that this simple sentence but the basis it correct.
The on-line tools that most platforms provide and their call centres are getting better all the time and a “basic adviser” would be hard pressed to show how they can offer any more than what the client can get for free. The task for advisers is how they accept that the future is definitely going to change how they do business and get remunerated and how they are going to integrate the every growing number of on-line tools and services into their business model.
It’s about making this a true profession.
This guy lives in an ivory tower and has no idea of what financial planners have been doing for years in Australia. Obviously he has not done any research and is shooting his mouth of! Most financial planners look at a client’s full situation and provide holistic advice. The ones who did not do it have either shut down or are shutting down (like AMP)!
Wait for the press release of support from the FPA and AFA to come. They did it for CBA during their advice scandal. AMP is just drawing up the wording now for the FPA to make an announcement. A nice fat little cheque and a guarantee source of membership buys a lot of silence.
If FPA members vote at the next annual general election that the FPA be wound up, we could put a wind up date on the FPA to be say the 31st of December 2021. That would give FPA members 12 months to move to the AFA or two other associations or do a course in tax law. The cost of the course or new membership fees would be funded by existing cash reserves held at the FPA. Imagine the message being sent. Rock up to the Annual General Meeting, with a few of your mates…. make a motion to wind it up and Dante and the handful of staffers that turn up would be your competition. All members of the FPA would then pocket the cash reserves and we’d be sending a very powerful message. Simples. Why not…be interesting.
The inference of course is that all advisers treat every client the same (one size fits all) and simply exist to move product. Is it any wonder AMP is in the position it is. Would suggest Mr de Ferrari get out and speak to some of his disaffected clients to find out theri needs and aspirations
What a load of codswallop. Low income earners need advisers more, not less. What he is really saying is that Advisers are not allowed to charge cost effective levels of remuneration that low income earners can afford, due to our insane FOFA rules, Opt Ins & FDS red tape regime. But if you are an adviser for with a Union Super Fund, it is OK to charge an intra-fund advice fee out of their fund (often with no advice ever bein provided to that member & with no provision to opt out of that fee). The hypocrisy that exists in our system now is ridiculous.
They cant transfer a database of advisers CPD points but technology is the future of the company. Dumpster fire anyone?
You cant make this stuff up.
He, Ferrari, been in the country for 2 minutes and purports to know what clients want and he is an expert in financial planning…..who is feeding this automatic scripted responses to him….!!
Well the way he is going – he won’t have to worry about an average Australian paying an AMP adviser…
Gobsmacked….and to think the likes of AMP and the rest of the peanut gallery are helping ASIC to form policy.
It’s time FPA members VOTE that the FPA be wound up, take a share of the reserves and start again….and just re join the AFA…that would put the wind up the industry representatives. Who is with me calling for the FPA to be wound up and we share the cash reserves? [/quote]
i’ve been calling on members to resign en masse but i have not had much success. i think only 2 or 3 have resigned and i have been on this for months and months.
in fairness though the FPA have these advisers by the short and curly’s as they cannot move to another association due to the requirement to hold tpb registration.
jammed if we do, jammed if we don’t.
So now it isn’t just Industry Super taking digs at advisers, now AMP has deserted its own…
This bloke has to go. No AMP aligned adviser would have any trust in his leadership. He is disgrace for what he has done to advisers in the network, out of touch, and dangerous to the entire industry
Just remember that AMP is a proud member of the FPA professional partner program helping the FPA to “shape the direction of advice in Australia”……. I hope FPA members are happy that the fees that AMP pay, (reported as member fees on their balance sheet) are worth selling your sole for, and worth over regulation, worth the Government intervention, worth the FASEA process, [b][i]worth the FPA representing AMP first before representing AMP advisers[/i][/b][b][/b][i][/i], worth keeping your head down and saying nothing. It’s time FPA members VOTE that the FPA be wound up, take a share of the reserves and start again….and just re join the AFA…that would put the wind up the industry representatives. Who is with me calling for the FPA to be wound up and we share the cash reserves?
But it’s ok for the same client to pay the products and fund managers every month though, that’s not too expensive for the “average” Australian ?
The average Australian is happy to pay for Financial advice contrary to what Mr Ferraro believes. If our clients are having regular contact with face to face meetings and receive trusted advice which they are satisfied with then they will stay with their Adviser. Maybe Mr Ferraro needs to get out to the coal face and meet with some of the practices that they have left at AMP and see what goes on in the real world of Advice & Planning instead of speaking on behalf of all Australians. I suspect Mr Ferraro has never bothered to visit the practises in Australia for which he is the head of the company that they represent.
Instead of Robo-Advice….what about a new concept called Humo-Advice (you know, the one where you talk to a human about really personal issues and place your trust in someone that you have created a mutual understanding with).
Maybe de Ferrari would prefer us to have either a Fem Bot or a Bloke Bot , or both as a life partner too !!
This Cretin de Francesco has absolutely NO grasp of the Financial advice industry or how to deliver advice that’s in the clients best interest.
Every time he opens his mouth he displays more ignorance, given his recent track record on the treatment of small business owners licenced or soon to be Delicenced through AMP I’m surprised he has the tenacity to show his face.
This is scary words coming from the Head of AMP, one of the biggest Financial Advice organisations in Australia. He seems to lack any understanding of what Financial Planning is about and whom it should assist. It is the “average aussies” that need the most advice and guidance on a regular basis, to ensure they will meet their goals and objectives now and in the future. And the only effective way to deliver this advice and ensure clients are adhering to the recommended plan is through face-to-face meetings every year. Which is more effective, watching a fitness routine on Youtube or regular PT sessions in the gym? Ridiculous statement from Mr Ferrari .
What an absolute moron. Sure, Henrietta may ‘only’ bring in $80k a year, which puts her on the cusp of the second highest tier of tax in the land, she probably has a house worth $900k debt free, because she’s a prudent money manager and has $400k in super. Yet AMP seem to think she would like tend to her finances on her own by sitting in front of a laptop one night, casually amending her asset allocation and drawing down on the equity in her house to make a small investment in between sips of wine during The Block commercials. This bloke has lost the bloody plot!
Maybe Francesco is being misquoted. I hope so.
Alternatively you would question the motivation behind using an income level to determine the need for recurring advice.
Someone approaching retirement or any number of other issues who is earning $50k or $150k p.a. may benefit from regular advice and knowing where they are at in fulfilling a financial plan. Yes, there are set and forget strategies, but certainly there are others who want progressive reassurance.
Someone earning $50k p.a. may not have a spare $1k to pay for a formal review every 5 years but is very happy with their adviser receiving $25/month in order to provide an annual update of how they are tracking.
AMP, and other instos, of course prefer a model approach where everyone gets the same report.
Yerp, lets talk down your own business model, where your network of advisers survive due to their “average” clients
This guy is an ignorant clown! He is only promoting his own agenda, which will fail and he will head off home to have someone else clean up his flawed business strategy. AMP is a joke!! And de Ferrari can head home to buy his Ferrari from his exit package!
Being told about how to run a financial services business by AMP is like being lectured to by Hitler on how to be a nice guy.
Mr De Ferrari wouldn’t know an average Australian even if he fell over them.. I don’t think he would get out of bed for less than $80k… A MONTH
Obviously the author comes from a sales background with ZERO idea of what a fair dinkim planner does. Ever heard of strategy and products are the tools, ever heard of holistic planning where a real planner looks at the total picture for the family unit. idiot—it is not just superannuation -it is the whole picture. As for seeing a planner at a critical time—sorry mate–the horse has bolted and recovery may well be difficult. This is a CHEAP shot at planners and a cheap shot at advertising your future plans. maybe a total ban on AMP products is in order.
I can’t even think where to start with a comment about this? Not only has de Ferrari lost me completely – so has Morningstar for giving a voice to this.
Will AMP ever move out of their own bubble? Their CEO has no concept of the changes that continue to move through our industry and particular what the role of an adviser is. Advice should be an ongoing relationship so that the advice remains relevant, not a one off product solution.
And here it is, finally, out of the mouth of the horse. There’s an acknowledgement that there are two Australias. The Australia of those who make a “average” wage of $80,000 – who shouldn’t be paying for advice (which is top 20% of taxpayers) and then the super wealthy elite private bankers.
This is the result of the inequality in our society.
de Ferrari has finally let the secret slip, there are those who deserve advice and they can afford it, and the rest of the country can just fend for itself with “DIY” options, regardless of financial literacy, regardless of reading and comprehension.
Anyone who advises retail clients – you need to become a private banker because you are going to get wiped out. Wholesale clients only from now on.
Maybe this is his “let them eat cake” moment?