AMP has announced it will introduce annual agreements for clients who currently receive ongoing financial advice as it phases out existing ongoing advice agreements.
The new system will be introduced during 2020, for both its aligned and employed advice networks, who are being notified today, AMP said in a statement.
At the start of an annual agreement, the client and the adviser explicitly agree the services to be provided and fees paid, an arrangement that expires after 12 months.
The move comes following a recommendation from the Hayne royal commission earlier this year that laws should be amended so that ongoing fee arrangements must be renewed annually by the client.
AMP Australia chief executive Alex Wade said the move to annual agreements was a step forward in the evolution of its financial advice business.
“We have been considering the best way to charge for financial advice and factored in a range of issues including client sentiment, pending legislative change, operational matters and increasing compliance requirements,” Mr Wade said.
“We think annual agreements best serve the interests of clients who want advice over a period of time.
“There are many ways that Australians want to experience financial advice. We believe there is a strong need for enduring relationships between clients and advisers, as well as more episodic advice and ad-hoc advice, where digital solutions will have a role to play.”
Mr Wade said annual agreements will ensure optimum transparency in the relationship between clients and advisers, while simplifying administration and compliance for advisers.
In addition, he said the change was being introduced over 12 months to give clients and advisers time to adjust.
“We recognise this is an adjustment for many advisers and we’ll be helping them with guidance, tools and templates to help implement the change in their business,” Mr Wade said.
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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