‘Full extent’ of AMP shake-up to come

Following news on Friday that the wealth giant’s advice revenue has dropped by 60 per cent since announcing a revamp of its advice model, Allan Gray CIO Simon Mawhinney said the changes currently taking place are “critical”.

“I think the wealth management business might die,” Mr Mawhinney told ifa.

“Revenues are falling, yes; part of that is product simplification and part of that is moving towards very contemporary offerings that are very competitive on the market.

“There is a lot of fee pressure and I suspect they’ve confirmed we haven’t seen the full extent of that yet.”

In its half-year results presentation on Thursday, AMP said its “advice reshape” program launched under previous chief executive Francesco De Ferrari was 95 per cent complete and pointed to increased practice productivity and scale as a key metric of success for the transformation strategy, with average adviser numbers per practice having increased from 2.4 in 2019 to 3.3 in 2021, and just 34 per cent of practices now one-man bands compared to 54 per cent in the first half of 2019.

Mr Mawhinney said he expects more “revenue pressure” over the next few years.

“It’s not clear that the underlying profits ultimately in wealth management couldn’t be sustained, but it is important they address that cost base,” he said.

It comes weeks after AMP’s head of advice, Matt Lawler, refused to speculate about how many advisers will opt to exit the company by year’s end.

Advisers – some of whom were terminated in 2019 – have until 31 December to make the decision to exit alongside the cessation of client register buy-back arrangements as part of the advice model changes.

“We’re not going to talk about numbers, because obviously that’s going to play itself out,” Mr Lawler told ifa last month.

“But we have a team that specialises in mergers and acquisitions and supports our advisers. We expect a lot of these businesses will be picked up.”

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.