Addressing a media conference on Thursday, AMP chief executive Francesco De Ferrari said the key to the strategy, which had seen AMPFP shrink from 1,414 advisers in December 2018 to 809 in mid-January 2021, was creating a “more sustainable setup” for advice businesses.
“We’re definitely looking to have advice practices that are sustainable, profitable, and therefore can invest in the necessary compliance and professional standards of their advisers,” Mr De Ferrari said.
“As we went into our advice reshape program, we gave our advisers that we felt were not meeting the required criteria or were not really sustainable, [the choice] to either sell us their business back, or merge with larger practices that can ensure a more sustainable setup.
“Almost all of the adviser attrition is driven by our advice reshape program. It is really a deliberate effort done in partnership with the advisers to try to make sure we have a professional and compliant network that can effectively deliver great advice for our clients and can be sustainable, also from a P&L point of view.”
While AMP said the reshape strategy had “substantially progressed” in 2020, profits were down 44 per cent in its wealth management business compared with 2019, with total advice revenue shrinking 20 per cent to $115 million.
The group attributed the poor result to “weaker investment markets and pricing and legislative changes”.
However, Mr De Ferrari said revenue per adviser was trending significantly up, while many advisers were taking the merger option rather than exiting the business.
“We are really tracking the average AUM per practice, and how that is moving. Pleasingly, our AUM per practice has gone up more than 40 per cent this year,” he said.
The wealth management business also saw $8.5 billion in net cash outflows over the year, $3.6 billion of which AMP said were due to the early super release scheme.
The group said it had completed 75 per cent of advice practice exits expected under the transformation strategy, with around 100 more still to come.
It flagged it expected to transform its salaried advice business into “a multi-channel proposition” with more reliance on phone-based and intra-fund advice, and decouple advice from product by focusing on standalone profitability of its dealer groups, in a similar move to IOOF.
The comments come following the news that US investment manager Ares had dropped its bid for the wealth giant, and that its portfolio review had concluded Mr De Ferrari’s transformation strategy was “likely to be the optimal outcome for shareholders”.
As more and more clients and planners “brush off” AMP, hopefully extinction is near.
What? Many advisers are NOT choosing to merge rather than leave, i could count on one hand the advisers I know that were even given this option despite many, many asking. And what do you mean by “a deliberate effort done in partnership with the advisers”? What sort of “partnership” is that FDF, where AMP forces planners to leave and then strips them of 20 years of equity on the way out the door?
They want practices to take over their own compliance because they have proved themselves incapable of the job over and over… they really don’t have a clue. Despite their licensees paying up to 20% of everything they earn, they couldn’t even meet their Corporations Act responsibilities of educating and monitoring the firms they licence. AMP are even more incompetent at any technological solutions so don’t hold your breath for any robo advice programmes… it is a sinking ship and they will never redeem their reputation after the brutal slaughter of the financial planning business and toxic culture of self interest and greed T management level.
As an ex-AMP paraplanner I spent a lot of time coaching advisers on compliance needs (including BID) and the amount of advisers that didn’t get it (or want to get it) was ridiculous. AMP isn’t perfect but it falls to the advisers as well to take the help/coaching when given, not put their head in the sand and say “I’ve been doing it this way for years”.
And yes the technology is rubbish, they spend millions developing a system that does the same thing that xplan does…
AMP have some terrible advisers in relation to compliance but they really don’t help themselves with a 100 page document to explain how to to implement BID. I once wrote a file note to explain why I couldn’t provide advice in a compliant manner as assessed by AMP but what I was doing was within BID. I have never seen a less client focused area than AMP’s compliance department.
I’m speechless in how to comment here respectfully. Does this Ferrari think we are all stupid? If he wa ts to polish the pig then he should at least be honest and also …..damn, the list is long. Is there really any truth in what he says or is it ok to misrepresent and paint what you like? So happy I’m not in AMP anymore. It was once a firm to respect n be proud of.
what a load of bollocks – pathological, – a deliberate process of knobbling advisers to try and avoid contracts, avoiding calls from advisers to address blatant falsehoods, walk back on contractual, previously compliant advisers sold books that were not and never have been compliant at inflated values – dishonest to the core and don’t have the courage to face up to the problems of their own makings. really glad the overseas bidder bailed. Maybe the leadership of these groups needs to attend the heavily touted ethics courses because it is evident in their dealings with their own people that they are totally disingenuous. well done US investment manager Ares ( Please moderator – dont dismiss this is not meant to be obscene
US investment manager Ares obviously dropped it’s bid when it did a bit more investigating and due diligence and saw that it would be buying a “sinking ship” which would be a worthless hulk as more and more clients and advisers jump off.
Good decision I would say.
Massively disappointed that Mr DeFerrari refers to improvements in “AUM” per adviser. In todays world success or improvements should never be based on how much people have to invest.
I call BS. Show me any company in the world that distributes more product with less people and you can’t sell products via the web when dog shit has a better reputation for quality. AMP are dreaming.
Truly Mr De Ferrari is a genius if he can create “economies of scale” from a smaller buisness!!!
Just what is AMP’s wealth management arm worth? Given the level of compliance it may be what CountPlus paid CBA – a large negative amount consisting of a tiny amount of dollars and an indemnification of $550,000 per adviser.
If AMP’s arm has a negative value, then others may not be positive either. Is regulation killing us and now we are about to get another big serve of them?
It is absurd that one man’s rush of blood (Commissioner of the RC) is destroying an industry and that it already has removed access to advice for small and medium size clients and had many advisers exiting insurance with dire consequences for the insurance companies.
Regulations as they currently are and will be impose a large cost on consumers, making advice too expensive for most. Remove the cause of the regulations – advisers directed by product providers to sell their products, i.e. commercial salesforces (De Ferrari) and you can dial down the regulations to near lawyer and accounting levels.
It wasn’t one man’s rush of blood. It was a carefully considered and delivered Royal Commission that found not only AMP but many other companies in the industry wanting. One clown (not AMP) wanted to move a client into a new superannuation arrangement where should would have lost $500K immediately!!
Total remuneration costs for the big banks are now well over $1 billion. Clearly a “big rush of blood” from companies that apparently, by your reasoning, did nothing wrong.