A number of current and former advisers recently filed a class-action against AMP following its decision to reduce guaranteed values in its BOLR contracts from four times to 2.5 times revenue, as well as terminate 250 planners that were no longer profitable.
“This is amongst many of the challenging decisions we need to take,” Mr De Ferrari told ifa in response to a question on the matter. “The advice industry is disrupted, I think that is a fact.
“We needed to readjust our commercial terms linked to BOLR because they were out of market. We have done this in line with what our responsibilities and commitments were and so we feel strongly that our position is the right one, and we will defend it.”
Mr De Ferrari declined to comment further, citing legal proceedings.
He also defended AMP’s declining adviser numbers, with the wealth giant shedding some 270 advisers over the half.
“Our aim is to arrive at having practices that work with us, that are compliant, that are productive, and that are going to be professional in servicing clients,” Mr De Ferrari told ifa. “We have not put a number to what is the right number because this is driven by quality.
“My experience is roughly through these exercises, 30 per cent of the practices do not make it out the other end of these disruptions but the ones that do run much healthier and profitable businesses.”
Can I also say thank you to all the other non-AMP planners who are supporting AMP planners – seems big business and governments alike still have no idea what we actually do, and the difference we all make in our clients lives.
There are many great advisers and businesses within the broad AMP group that have survived the culture of Aint My Problem – HR policies that promote incompetence and aggression, dinosaur platforms, greed – hopefully they thrive on the other side because they are stronger for the experience.
Are you implying that the ‘terminated’ practices were NOT “compliant, productive and professional in servicing clients”???? Shame on you DeFerrari. They did nothing more than run at a revenue level that wasn’t profitable enough for YOU! At least confess to that reality!
De Ferrari will sing a different tune when the class action plays out in the media and the courts. Little bird tells me he is already looking for another job
Left that ‘sausage sizzle’ back in 2004. The writing was on the wall when started I recommended ‘other’ products that were on the APL (other than FLS)
I remember going to the national AMP ‘love in’ conference where they all had their AMP boxer shorts on, AMP dooners and wore their AMP pyjamas to bed at night.
Don’t get me wrong, some of the individual AR’s were great.
AMP is a perfect case study example on the stock market of a completely ‘uneconomic business’
They told me they were glad to see the back of me. Then there was the 6 month ‘no contact’ clause with an AMP client (my clients) to contend with. Are you serious Australian Mutual Provident!!!
There are some rightly angry AR’s and they should be, but surely they could see that the business model was completely unsustainable and the writing was on the wall.
They have given a lot of the one’s who they are forcing out 3 year non compete terms. That is only one of the issues where they have shown a lack of ethics. De Ferrari is truly scum.
OK lets get to the facts re this and cut out all the fiction.
1. There was no bias to AMP products in the BoLR system. All products on the Approved Product List (APL) were available for sale back at the same multiple (despite the AFR continuing to suggest otherwise). Plus the APL was extensive with many external products and options to supplement AMP offerings.
2. It is NOT really 4 times as reported as the 4 times was capped. Let me explain ….. what is the average advice fee charged by planners…..lets say 80bps. AMP BoLR only provided only 4 times up to a cap of 45bps with only 1 times for amounts over the 45bps. So a market transaction on 80bps at 2.5 times multiple would a value 2.00 the same AMP adviser would get a value 2.15 for the same transaction…..only slightly above what people call the market but this was offset by the need for institutional ownership. So hardly the excessive scheme many are outlining in commentary.
3. What really killed this was when poor decisions from AMP executives killed the AMP eco system where new planners were sourced through Horizons and where well trained and supervised to becomes successors and purchasers of practices. The moment Horizons was scrapped signalled the end of the AMP ecosystem.
All very sad but these are the facts
Horizons was a great training program in its early years, and the recycling of clients from retired advisers to new entrants worked fairly well.
But Horizons was transformed into a tool for AMP and its established advisers to offload C & D clients at inflated prices to naive new entrants. It stopped being an ecosystem and became totally unsustainable.
Sydneysider, do you have any source or document that outlines the BOLR rules? Is it really 4 times the first 0.45% and 1 times afterwards? I haven’t seen this elsewhere.
What about the new 2.5 – what do advisers actually get after compliance deductions and do they use the same calculation basis, i.e. 2.5x the first 0.45%, then 1 time?
I have seen lots of AMP advisers buy up everything in sight at 2.5 even 3 times shortly before retirement in order to sell it to AMP. That does not tally with an effective 2.1 times BOLR.
No it is not 2.5x, this was based on grandfathering being included. It actually is 1.4x, once you take into consideration that they are failing everybody in the exit audit (in which most of them passed their annual audit successfully year after year), means you get $0 on your register. So to answer your question it is 0x, in most cases you end up leaving with a debt even if you didn’t have one to begin with because you paid your loan off, because AMP expect you to remediate the client out of your own pocket. AMP will then on sell your register to another practice at 2.5x making a profit off your back whilst they have destroyed every bit of dignity that was left in you. They are vultures!
That is exactly what the terms were for BoLR the 4 times was capped. Cant comment on the new 2.5 as I am not across the new terms but I know the old terms well!!
AMP Would be just about dead in the water. What adviser would honestly go with them? Having done some contract paraplanning work their rules mean that the advisers end up with an SOA that is way too long and the clients cannot understand it along with a clear push towards AMP products, most of which are rubbish such as their Flexible Super product.
The problem is they sold them at 4 times RR and gave the advisers confidence that when they exited they would buy back for the same, 4 times RR. The rules should only be changed for new advisers. I am not an AMP adviser but this is not good business.
The SOAs are not just unnecessarily long and fluffy, but are also subject to compliance warfare where the vettors continuously battle with them on inane matters, and then AMP can use this as leverage against their valuations. Horrible dealer group.
There are many things wrong with AMP Andrew, but the Flexible Super product is not one of them. It was designed to compete with “Industry” funds and does so very well. I am self licensed, and would happily recommend Flexible Super ahead of most “Industry” funds.
Except that product is in outflow
Undisclosed settlement on the court stairs.
AMP Created their own commercial universe through their BOLR handcuff system years ago, which stood firmly outside any sense of external commerciality.
They think that they can simply wake up one morning and blame external environmental considerations on their decision to break their contractual obligations – without following their contractual obligations. Simple as that. Looking forward to seeing their supposed “Defense” Australia will be watching. Many great planners done wrong by here.
Totally agree with the other comments. Remove institutional ownership if they are going commercial. Then advisers can decide if they want to align their practices with the values exhibited by AMP or not. Institutional Ownership is also stopping AMP advisers from attaining business finance from elsewhere. This is third line forcing and further lining their own pockets.
Did AMP receive a x4 multiple when they sold the books to advisers. Oh hang on, the market conditions were different then and thank you very much, we will just pocket the x1.5 multiple that we promised to pay back. In my 20 years in this industry, I don’t ever recall such distaste for a wealth manager as with AMP.
Let’s be realistic. 4 times for BOLR !!!
How many advisers joined the AMPFP network on this basis knowing full well that they were limited in product offering to their clients? Is this how the industry should operate? Does this meet BID?
I applaud AMP for their decision to remove greed as a motivating factor.
@Frank G, you obviously have no idea how the system worked. It is up to the adviser whether they are restricted and i would suggest that those who did exercise the choice regularly are those that are on the chopping block. The 4x BOLR was at premium bacause of AMP retaining ownership of the client. Now they have reduced the BOLR but made no move on the institutional pownership. AMP are not doing this to be good corporate citizens, they are breaking a contract and want it all their own way. Unethical and immoral behaviour. You wouldn’t be an AMP Exec by any chance?
If you bought in to an AMP Practice and PAID 4 times in the last few years (pre Royal Commission) you might have a different view on BOLR dear ‘realistic’ Frank.
After seeing Jack Regan in the witness box, well, you know the story.
Why have a contract? At the very least, a decent company, if adjusting the valuation (that AMP set as the market maker) then adjust the lending accordingly. You have taken peoples homes as collateral. All current advisers should consider if AMP is willing to do this to their own, how can they, in good conscious, recommend any of AMP’s in house products or platforms to clients? AMP does not uphold contracts, does this mean the PDS’ for their own products will also not be honored? At the same time De Ferrari want to increase his own remuneration incentive from 120%-200% of his fixed base salary after AMP post a $2.5 billion loss in 2019. It takes BlackRock to step in and say, “C’mon mate, you’re having a laugh.” You do not rebuild trust by stabbing in the back those who represent you in the community. The sooner AMP is sold to a more reputable (hopefully Aussie) operator, the better for clients, advisers and shareholders.
No mention by De Ferrari of selling D and E clients, including *commission* clients to AMP’s newly appointed advisers at 4 times recurring revenue as AMP gave existing advisers the right to sell back their worst clients – and then on-sold those clients with the worst prospects at full price to new advisers and on top of all of this lent them the money via AMP bank … These clients were only worth 1-1.5 times recurring revenue – at most.
Guess which FASEA board member is head of a financial planning department in a university and this university has a long-standing agreement to funnel its graduates to … AMP!!! where they buy D+E clients at four times recurring revenue.
AMP’s issues have been known for well over ten years and I have a lot of trouble with the ethics of sending newly minted graduates to AMP and continuing to do so – the university is still advertising that arrangement.
What just astonishes me is that the head of that department is on the board of FASEA, thereby lecturing advisers on ethics.
Sadly Mr De Ferrari will not be around to clean up the mess that he and other executives have created, so he can say what he likes,but moving the goal posts is a disgrace
Compliant here has two meanings and I suspect De Ferrari means both of those meanings.
No BOLR to speak off and you don’t own the clients – AMP does. I wonder if this is a permissible combination or too unfair to survive a challenge in court.
It is imperative that AMP lose this case in order to highlight the appalling level of misuse of corporate power that has taken place.
The lack of ethics and morals relating to AMP is simply overwhelming.
I truly hope that AMP is made to withdraw this process, re-establish the previous position and then compensate affected advisers for the financial impact and stress.
This is about corporate bullying and power and it must not be allowed to succeed.
“We have not put a number to what is the right number because this is driven by quality.”
Ferrari is deluded.
AMPFP are keeping all the larger practices where many do not have a grasp on compliance.
I hope that class action buries AMP
If De Ferrari got on the phone to the Treasurer & got rid of Opt Ins off advisers, he might get some new business. Otherwise, 15,000 advisers are likely to steadily drill their super fund platform to death, with only the AMP property & infrastructure funds surviving. These Corporates are living in cuckoo land.
if their offer is so attractive to the remaining AMP advisors, then remove the institutional ownership, and the remaining practices can make a choice to stay of leave, As he said “We needed to readjust our commercial terms linked to BOLR because they were out of market” what a joke AMP.
What utter BS. Commercial terms do not apply to a closed market created by the BOLR system in the first place. If they want it to be commercial, they would remove the institutional ownership of all clients as well but they are not willing to do this. The same as AMP Bank will not allow finance to continue if you leave them. This is just an excuse to cull all of the practices that do not make them enough money by promoting their own products and investment options.
Spot on…plus they cull “compliant” businesses that are not promoting their products, and who are/were actually acting in the client’s best interests, above AMP’s best interests….a MASSIVE conflict here…for ASIC & FASEA’s attention!!!
Is that right? best to move dealer groups before you are pushed. Where have you got this info from? Like some of the others, I dont want to recommend an AMP product on a purely ethical stance given the recent goings on with the resigned CEO. Clients are demanding somewhere else. I dont see how recommending another product that meets BID is an issue if we are genuinely charging a fee for advice and strategy for which they are happy to take a dealer cut.
Good luck – AMP will not be able to defend this one – simply wrong and against contract. Sorry for the advisers who have to resort to a class action