That’s the verdict from Morningstar. In a recent report on AMP, banking analyst Chanaka Gunasekera evaluated the company in light of last week’s announcement that it will sell its life business and spin off the New Zealand wealth and advice business via an IPO.
“We believe AMP will be in a period of transition for the next few years and will suffer from higher compliance costs and lower growth as it employs new senior management following shocking revelations regarding the royal commission,” Mr Gunasekera said.
“There is also considerable uncertainty on AMP’s strategy, given it has just appointed new CEO Francesco de Ferrari, and David Murray has only recently started as chair of the board,” he said.
“We also expect more fines, higher compensation payments and potential class actions.”
Morningstar noted that AMP has suffered from “material reputational damage” over the last 12 months and described the revelations from the Hayne inquiry as an “unprecedented disaster”.
The analyst expects that a more proactive corporate regulator and a compression in margins due to the royal commission will result in significantly lower growth rates for AMP’s funds under management.
However, Mr Gunasekera believes the biggest blow to AMP will occur if it is forced to dismantle its vertically integrated model, which he described as the “backbone” of its entire business.
“The royal commission increased the risk that AMP will be required to break up its vertically integrated model, and this threat and other regulatory risks make AMP a high-risk investment,” he said.
AMP’s vertically integrated model allows it to charge several layers of fees, including management and platform fees, the analyst noted.
“Prior to the royal commission, AMP intended to increase minority stakes in growing advice practices and acquire more client books via ‘buyer of last resort’ agreements. But with the combination of the likely phasing-out of grandfathered commissions and higher education standards, this may prompt more advisers to leave the business, triggering more BOLR agreements than expected.”
In 2012, prior to the introduction of the FOFA reforms, AMP had 4,276 financial advisers.
The total number of AMP-aligned financial advisers currently sits at 3,123 across its licensees, down 7.3 per cent from 3,370 in the first half of 2017.
The group’s 2018 half-year results revealed a decline across almost all of the company’s “core licensees”, including a 10.1 per cent drop at Charter Financial Planning, 12.9 per cent drop at ipac, and 5.9 per cent drop at AMP Financial Planning.
There’s no reason to put anything on mynorth when bt panorama is cheaper and just as flexible.
Correct. AMP literally do nothing well other than rip consumers off. Hopefully they get sold off or just capitulate completely.
It couldn’t happen to a nicer organisation. All well deserved and not a moment too soon
Perhaps ASIC should look at the Chairman of AMP and the Chairman of AMP Super- have they got good records.
The FPA has shafted every adviser in the country and the Royal commission has finished the job. The industry and in particular the advisers will take decades to get over this shellacking. Who on earth would want to be a financial adviser or run a practice with this mountain of distrust from every angle. Your not educated enough – do more courses. Your not to be trusted by the FPA – do more courses. Your not to be trusted by Asic – do huge SOA’s and keep copious file notes. Your not trusted to get things right – make a mistake, pick the wrong client or investment and a Slater and Gordon will litigate you into oblivion.
Financial advisers reputation and trust worthiness is below that of a car salesmen. AMP financial advisers are below that of warranty and aftercare salesmen. You won’t revover from this people in this decade. It cost too much to risk seeing you.
Advisers made a choice when they paid their FPA membership fees to go to bed with product manufacturers and now they’re paying for it in red tape, Government intervention and I don’t think they really care given no one is disgusted that the FPA makes the majority of it’s income from these product manufacturers.
Ok , I haven’t heard that before . How much do they pay ??
You haven’t heard of the professional partner program?
I did not make that choice and i don’t appreciate you telling me I did. The Fact is I, as a planner need to be licensed (talk to ASIC about the people who hold those licences) and the Licenses often require membership of FPA or other. The fact that the product manufactures (really who cares anymore) sponsor/pay/whatever the FPA and many other is not the problem – ASIC will never address the issue that product manufactures own licensees (retail land) and on the other side (Industry Fund Land) it’s a one stop shop with exemptions to law for it’s “advisers/call centre staff”. More red tape will not fix anything – ASIC needs to go and be replaced.
The fact that the product manufactures (really who cares anymore) sponsor/pay/whatever the FPA and many other is not the problem – So it really seems like that FASEA,LIF,Opt in and red tape is working out well for you and you’re quite happy to do the same old same thing? Just imagine the success if Australian medical association goes to Government lobbying on behalf of Doctors if they received funding from Drug Companies..not going to work is it. Time for a change I reckon.
Im assuming you both are not advisers, as they are the biggest loads of codswallop I have ever read. Business is great at the moment, this is of course in the real world not the one you guys seem to live in. You both need to get out more.
For F#%+^*# sake. This has nothing to do with the FPA. Every article you rabbit on, no matter how irrelevant to the article about the FPA. Do us all a favor and quit, move on, let it go, cease and desist.
I’ve spent 20 years telling clients the only people who get wealthy from a relationship with AMP is AMP, then the AMP adviser and a very distant third is the client. My broker report has not changed since my original recommendation when they floated, that being Sell. If you’ve got a problem with that call me at AMP and press option 5 then option 26 then option 4, leave a message and I’ll call you back next month.
I’ve just read an AMP SoA recommending a client rollout of their AMP Flexible L Super Account balance $90,000 to AMP MyNorth on the basis that the fee is $2,000 cheaper but when you take into account the new ongoing advice fee of $3,500 a year and the upfront fee of $4,500 for a guy that earns $38,000 a year, 47 and a $200K mortgage, it’s stinks like a raw prawn in their processing centre in Manilla.
And that will be the next crackdown coming…charging ongoing advice fees from super. I can see this being stopped or capped. The case you mention is not dissimilar to using super fund balances to fund massive risk policies.
What is is the issue you have with these costs? These are the new minimums. I assume you mean FLS (an old Commission product) in this example and guess what – that is what the public seem to want. Move out of FLS with 0.4% ongoing to 0.8% plus ongoing. Give them what they want.
The difference between an EU and having your licensed revoked is the size of your balance sheet.
Not to mention your ability to offer ASIC staff a high paying job in compliance in your business. There is only so many years you can work at ASIC and have one of those Sydney Mortgages before the alluring salary at CBA or AMP starts to attract you.
The problem for Dover was that no one really wants to work in the Philippines in compliance.
WRONG! it was an offer of full time job in the vietnam. vietnam is a lovely country. you are allowed to drink and behave boorishly without having to go to prison.
Ha ha.. I’m sure if ASIC staffers had a choice they’d love Vietnam. Option 1), turn a blind eye and end up working for CBA and get paid $300,000 in compliance or option 2) work for Dover and get paid $30,000 as head of Compliance in Vietnam and party with the ladyboys. Maybe Dover needed to work on selling Vietnam better.
[quote=Anonymous]Unfortunately the Royal Commission has become a raging bull and requires to be tempered. Whilst industry super has come out unscathed, even though it employs some of the least educated and poorly guided financial planners, the retail sector is being dismantled unnecessarily. It is unimaginable that AMP, a once proud behemoth would end up like this. Its senior executives are to blame for this yet its own financial planners appear to bearing all the stress. The Fairfax media has delivered an immense bias by self opinionated journalists. I noticed one article in the AFR yesterday that omitted relevant information that would have a resulted in a clearer understanding of the risks industry super fund managers make in order to achieve their results. The risks taken by industry super is barely mentioned. When Silk and Haynes met eye to and smiled lovingly at each other, I could see that this Royal Commission was never going to be fair. I have a current Masters Degree in Financial Planning and have practise for almost 4 decades and I have never seen such a destructive force causing such anxiety amongst a community. Where is our support network and who has got the balls to take these miscreants down before we are all subjected to this Bolshi inquisition? Can you trust either major party now?[/quote]
Yes and what about the Bonus system ( VPS) for AMP Advisers that is paid to them twice a year for writing AMP Products when is that Elephant in the room going to be addressed !!
No thats ok its grandfathered .!!!
I thought AMP was Hotel California, check out any time you like but you can never leave!
Fake news we can’t leave!
Ah yes the old AMP academy . This was the brainchild of the old guard to brainwash ( I mean educate ) newbys to the AMP way, back then .No qualifications needed , just the mirror test ( If you had a moist breathe on a mirror held to your mouth you passed ) . They quickly shut it down after the GFC , but now has arisen . To be shut down soon I bet . Now who is going to educate the future planners going forward of the AMP way?
Well Mark, it might shock you to know that Amelia Constantinidis the former Director of AMP Horizons from 2013 to 2016 is now the Standards Director at FASEA. Have a look at the LI profile and you tell me if this person is qualified for that position?
The standards director of” I don’t know what yet as we cant make up our minds !!! What about a closed book exam only on the corporations act for 4 hours ??? that should do the job , Good luck stockbrokers and lifee’s and Industry super fund planners and accountants passing that . Oh is it for general advice only licences’ s as well ??
Hi Mark, the idea of the academy was very forward thinking ( i’m not being sarcastic here), the intent of the academy was bring forward 2-3 years of traditional financial planning experience into 12 months. The problem was not the program, the problem was the people that were in there. I personally went through the program, and learnt a lot, however, The AMP academy would pitch to you in the early days that its about best interest and then when they gave you the AR status, the true AMP came out, sell sell sell product. And 98% of people 12 months after the program finished were no long part of AMP and around the same percentage were no longer financial planning.
Gee this seems to be out of line with what AMP have been telling us about advisers sticking with them. I wonder if someone is telling porkies?
He gets 2 million dollars a year , he has to say that!!!! its the AMP bullshit dept . Ps I spent a total of 5 hours last month on hold with them on the phone . Wake up AMP advisers will not put up with this much longer !!!
This is insane. The profession needs cleaning but the repercussions of how this is being brought about with a rabid regulator (who corruptly makes deals as it wishes and ignores a $22trillion ISA sector for no reason) means that ultimately we will have massive corporate failures (anyone wish to revisit the Lehmann Brothers?). Couple that with the loony left Labor’s plans to cut franking credits, negate negative gearing tax benefits and likewise alter the lending landscape and we are facing major catastrophic economic impact. Keating’s “recession we had to have” will look like a picnic in the park compared to the economic devastation Labor will wrought through ignorance, bloody mindedness and greed for their Union/ISA funding.
Unfortunately the Royal Commission has become a raging bull and requires to be tempered. Whilst industry super has come out unscathed, even though it employs some of the least educated and poorly guided financial planners, the retail sector is being dismantled unnecessarily. It is unimaginable that AMP, a once proud behemoth would end up like this. Its senior executives are to blame for this yet its own financial planners appear to bearing all the stress. The Fairfax media has delivered an immense bias by self opinionated journalists. I noticed one article in the AFR yesterday that omitted relevant information that would have a resulted in a clearer understanding of the risks industry super fund managers make in order to achieve their results. The risks taken by industry super is barely mentioned. When Silk and Haynes met eye to and smiled lovingly at each other, I could see that this Royal Commission was never going to be fair. I have a current Masters Degree in Financial Planning and have practise for almost 4 decades and I have never seen such a destructive force causing such anxiety amongst a community. Where is our support network and who has got the balls to take these miscreants down before we are all subjected to this Bolshi inquisition? Can you trust either major party now?
have you joined the FPA or AFA, they’ll save us.
Haha. Too funny
If AMP’s products are competitive (and most of its modern products are) they can still thrive in a non vertically integrated world.
They need to get rid of the antiquated system of BOLR and institutionally owned clients, and move to an open market approach.
They arent though. North is redundant as a platform after BT dropped their fees to a fraction of North and Netwealth, HUB24, Praemium are all better and cheaper also. AMP really does nothing well, their insurance was ok but thats now gone. What else is there?
No different to any of the other banks! didn’t see headlines like this for NAB or ANZ the kings clickbait
Places it’s old mantra ‘We’ll always be there’ in serious jeopardy
and yet Dover has it’s licence cancelled asap whilst the AMP and the Big 4 roll on. ASIC must be investigated. Sack them all and start again.