In an exclusive interview with ifa, AMP group executive of advice Alex Wade answered the tough questions many advisers would like to know the answers to.
The group is undergoing an extensive overhaul of its advice business, with some practices staying with the group and others being let go. What was it about those that have received termination letters that made AMP decide they should no longer be part of the group?
“It’s really about having sustainable businesses for the future,” Mr Wade told ifa. “There may be some that are not quite profitable today but with a few tweaks would be very profitable. There are some who may be a one-man band that may be very strong in its existing capability with an existing adviser, but then how sustainable is that for the long term? I’m not sure.”
“For us it is about looking at each adviser, each practice, how they sit and where they could benefit – for them and their clients. It is about identifying the best need for the adviser and their client. That may see a lot of mergers. It is about looking at each individual practice and seeing if they are sustainable, whether we can help them be sustainable.
“Obviously, there are a lot of disruptive changes to the industry. Grandfathered commissions and those sorts of things that are impacting the economics. But realistically we are trying to retain the best advisers in the best way for their clients that creates a sustainable business for the future.”
Mr Wade is part of AMP’s new leadership team, which includes his former Credit Suisse colleague and AMP CEO Francesco De Ferrari. When the new management announced changes to buyer of last resort (BOLR) arrangements in early August, many AMP advisers found themselves in a difficult financial position. Some are effectively in negative equity, owing more to AMP Bank than their business is now worth.
But those outside the network knew AMP advisers had a good thing going; the four times revenue promise was unheard of anywhere else in the industry. Did Mr Wade and the new leadership team think these high valuations should never have been made in the first place?
“I have personal views on some of the decisions that we inherited,” Mr Wade said. “But honestly, we are just focusing on going forward. That’s why you saw that huge write-off number. We came in, there were some things that we needed to deal with around legacy and we wrote it off. I think the feedback and support from investors was strong. The revalue of BOLR was part of that, to realign those businesses to market value.”
Given that many advisers took out loans from AMP Bank under the expectation that their businesses would be valued at four times, should the bank not meet them in the middle and adjust the loan balances accordingly? After all, it was AMP that devalued the book – not the adviser.
Mr Wade said the group is having individual discussions with each practice about this issue.
“There is no one-size-fits-all approach,” he said. “It differs by practices, which is why it is a pretty big task.”
The AMP Financial Planners Association this week announced that it has stepped up its action against the company. The association has surveyed member practices about the action they want to take and received a response rate of over 90 per cent. Of those who responded, over 93 per cent indicated they support legal action. They are now effectively preparing for a class action.
Ampfpa CEO Neil Macdonald said his members intend to hold AMP accountable for the severe financial, reputational and psychological harm it is inflicting on its own advisers.
“I can fully empathise,” Mr Wade said when asked how he felt about the impact that BOLR changes have had on advisers.
“You had an expectation of something that has changed. The challenge with that is that it is unfortunate that the industry has changed. It is a reality of the circumstance, but I can empathise that some people didn’t think it would happen so fast or would happen differently.
“I have a lot of empathy for what everyone is going through in the industry. What I can emphasise is that we are trying to support our partners through this in whatever outcome that may be, whether that is a stay outcome or a leave outcome.
“We haven’t done what others have done and just dropped them. That’s not our approach. We have been very cognisant of supporting these people. This has been a partnership for a long time with a lot of people. I’m very aware of that. We are trying to manage through that in the best way for everyone involved.”
Nothing ever changes. Just the new boys in town from Credit Suisse who are in top jobs with top salaries and saying ‘oh we didn’t put it together in the first place’. AMP is dead….
IFA- I would love to have you interview Wade again and ask him why they are not providing their preferred practices the information they need so they way feel confident / comfortable buying / merging with these sacked practices?
Are they planning on servicing these clients themselves? Is that their intention?
Also ask them about the rumour that they plan to introduce a new North product which is cheaper and only available to their internal employed planners?
Also, maybe ask them how they are helping planners who have ended up in significant negative positions that they then have sacked and intend to force the sale of their homes? Yet, they tell the media that they are assessing support on a case by case basis.
Maybe ask Neil Macdonald to provide you with a list of the questions that they have put to AMP to answer which have not been answered. Maybe if you ask them, we might get some actual answers.
Not correct.
The 4x multiple was benefiting AMP and AMP only as the bigger the multiple, the bigger the loan and interest that AMP would get.
AMP Planners are not limited to AMP Products and 4x multiple applied to revenue generated, including Fee for Service and had nothing to do with product.
ASIC and others were well aware of this arrangement and it was perfectly fine by them. This was how an AMP business was valued. The multiple did nothing good or bad for the client.
What is scandalous is that AMP decided that the contracts they signed with their planners are meaningless.
[quote=Anonymous]The 4 x BOLR multiple was always way above market price. This was the mechanism that AMP used (i.e. bribes) to reward planners for breaking the law and recommending overpriced, outdated and underperforming AMP products to all their clients rather than recommending the best product…..and AMP planners were happy to play the game and line their own pockets with the 4 x BOLR multiple……It was a bit like blood money.
And when those pesky lawyers at the Royal Commission uncovered the arrangement (which was totally not in the client’s best interests) AMP decided it better start abiding by the law.
AMP planners were happy to play the game while the scam lasted…….
[/quote]
The 4 x BOLR multiple was always way above market price. This was the mechanism that AMP used (i.e. bribes) to reward planners for breaking the law and recommending overpriced, outdated and underperforming AMP products to all their clients rather than recommending the best product…..and AMP planners were happy to play the game and line their own pockets with the 4 x BOLR multiple……It was a bit like blood money.
And when those pesky lawyers at the Royal Commission uncovered the arrangement (which was totally not in the client’s best interests) AMP decided it better start abiding by the law.
AMP planners were happy to play the game while the scam lasted…….
What is your association doing to support you? Suggest you contact them. Will they do anything? Who knows but AMP is over as an Australian icon. Bye AMP.
‘You had an expectation that has changed’. I must remember that quote if a client suggests I have not been truthful.
I am impressed that the crooks running AMP can make the determination of what best suits me and my clients without once talking to me or “offering” solutions prior to terminating my licensing arrangement with them and calling in the debt which I owe them. They have decided my business is not sustainable without knowing anything about my business or future plans in addition to calling in a loan which has been repaid in accordance with the contracted terms since establishment. For the 0.00001% of people considering using them still — don’t please because they are crooks and narcissists. I really hope Fiat and Wade get what they deserve, which definitely is not a bonus.
Every client I have spoken to since my termination meeting has assured me they won’t be staying with an AMP linked adviser – though obviously I have spoken to my favourites first.
Wade is being blatantly dishonest by omission. His level of non-disclosure would see him removed from any licensee. Yet he purports to judge advisers. To not talk about the reasons for 4 times bolr at amp and it being inextricably linked to institutional client ownership borders on being sociopathic – how else can he keep not telling the truth with such a straight face? AMP has benefited for decades from institutional ownership and now it wants to duck out without footing the bill. There was a contract. There is a contract. It says 4 times. Contracts do not allow one party to unilaterally gain an advantage at the expense of the other party to the tune of half a billion dollars which is what AMP is trying to do.
No one trusts them they do not realise it yet they are like a chicken with there head cut off running around . What I do know and I i what I can tell u truth they are morally bankrupt and ethically bankrupt company and no one will forget this over. time When all is revealed .
Headline should read “we had an agreement but we changed it” : AMP
“We haven’t done what others have done and just dropped them. That’s not our approach.”
True?
What AMP seems to have done is:
Devalued practices to nothing?
Terminated practices looking after small value clients (after devaluation they don’t have to pay those practices for their clients)?
Told terminated practices that their loans are still due (free clients and a loan to be repaid got to prop up the bottom line)?
And now that AMP has effectively taken over many small clients for free they will be offering these clients their in-house RoboAdvice product?
Oh, the empathy….?
Anti-competitive behavior?
[quote=anonymous]Amicus certus in re incerta
[/quote]
i saw certus and incerta and thought maybe you meant to say i[i]nserere in tergo finem[/i][i][/i]
i think that’s what you meant right?[/quote][quote=anonymous]Amicus certus in re incerta
[/quote]
i saw certus and incerta and thought maybe you meant to say i[i]nserere in tergo finem[/i][i][/i]
i think that’s what you meant right?[/quote]
sure feels like it.
In case you missed it, the “performance rights” for Francesco de Fiat were granted yesterday 12/09/2018.
See the ASX announcement – Replacement Recovery Incentive Award
Under Securities he now has 8,024,378 performance rights, up from 1,656,978
Like a documentary where the jungle animals eat their young to survive. You knew it would happen, but you don’t like it, you can’t do anything about it, and it makes you feel sick.
AMPs actions will make for a good university cased study on the psychopathic tendencies of CEOs but will do nothing for the AMP share price. How an organisation can eliminate any semblance of trustworthiness in one action and expect to survive is beyond me. They defend this in the name of disruption. What is their distribution plan ? AMP have an expectation that has spectacularly changed. Another good case study for a first year uni student.
If there was any empathy or understanding then Wade & Ferrari would not be taking the action that they are. They obviously do not understand what they inherited in BOLR, yes it is higher than market value, but it is also a closed market to AMP planners due to the instituional ownership of the clients. AMP want to reduce BOLR but make no change to the client ownership. Unethical and immoral behaviour and with the stress that they are causing, there will be lives lost due to their decisions. Whatever option you take you still have to remain positive about AMP, all while they stick the knife in and and twist.
Amicus certus in re incerta
[/quote]
i saw certus and incerta and thought maybe you meant to say i[i]nserere in tergo finem[/i][i][/i]
i think that’s what you meant right?
Two questions for AMP
1. How does a narcissist show empathy?
2 Do you know what Tony Robins has to say about the word “Try”?
Much of the media is talking about the drop from 4x to 2.5x to reflect market value, but the issue is more complex than just adjusting to market value. And the value drop is much worse that 2.5x if there are grandfathered commissions as part of the Practice’s client book, these have now been valued at 1.42x (I think) with a glide path that will reduce each month as they get closer to the removal of grandfathered commissions.
Many advisors that joined AMP, and bought a book at 4x, done so with the knowledge that they were effectively committed to AMP for their future in the industry (handcuffed), and restricted to an APSL that was ‘AMP’ when placing clients in platforms. If these advisors leave and sell their book back they cannot work in the industry for 3 years, and never actually hold ownership over their clients (terrible descriptor I know). Similarly the AMP HillRoss Advisors have different options, higher similar valuations on the book with handcuffs, or a similar market value with no handcuffs. AMPFP advisors didnt have this choice.
AMP Horizons pumped out many PSO’s (Practice Startup Offers) where AMPFP would support building a new practice, where these advisors were told that they would pay 4x for the value of the book and would be given 4x on sale. On exiting Horizons they had to go stay with AMP (one year exclusion) and really didnt have much of a choice to go somewhere else (although some did). This PSO finance was protected by the BOLR policy that guaranteed a 13 month notice period so if the valuation of the book changed it gave the Practices enough notice if the time required it.
The protection afforded by this policy was what gave many new PSO’s the confidence to put their family homes as security against the loans from AMP Bank that funded the book purchase. Now AMPFP has changed the terms effective immediately – the Practice’s do not have the option to exit on old terms, or those that were due to exit in the coming months are now looking at the possibility of AMP taking their family homes due to the reduced value on the book / debt they have taken on. If this is not unconscionable conduct or unfair contract terms that small business is supposed to be protected from, or that the lender has improperly taken advantage of a power imbalance between the parties, I dont know what is.
There is also comment in the article that it was AMP that devalued the book – not the adviser. AMP’s conduct pre and post Royal Commission has ensured that AMP Advisor’s clients are leaving on mass, further devaluing their books. They have had no control over this and no influence on it, they are just paying the price for AMP, being AMP with no consideration given at all.
Mr Wade says that ‘honestly, we are just focusing on going forward’. The AMP code of conduct is very clear on what is expected of their people and is I guess hope it to be the standard for its people for the future, but it appears that this code doesnt apply to AMPFP. The BOLR Policy is very clear on what AMPFP has committed to, and the actions of AMPFP’s leaders Wade / Ferrari, is in clear contradiction to the Code of Conduct. If this is how the leaders act, what message does it give to the those under them when they consider how to apply to the code to themselves.
I had a contract that AMP has changed
NEVER EVER USE AMP Products.
Can’t remember the last time our advisers did but our APL now has ALL AMP products on hold. (Which actually means never to be used).
Good luck flogging your dodgy AMP products via ROBO advisers.
AMP GONE!!!
Now is good time to question the relationship between AMP and the FPA. Get off your butts and email the FPA about this relationship. Take note that “AMP is a proud member of the FPA professional partner program helping to shape the direction of advice in Australia” (in return for a nice little lump sum and a gravy train of members of course… Just how does a company that lies to ASIC 22 times shape the direction of advice in Australia? Do we really want professional associations representing product manufacturers?
Our brother and Sisters at AMP are hurting..,faced with this conflict who will FPA act for. AMP, Australians or the planner? I bet AMP.
As someone who works in funds management, AMP never allowed our products on their APL. Massive conflicts and no client BID whatsoever. The industry needs to band together and support AMP planners. This is wrong. Will never (EVER) touch any AMP product again from banking/mortgages to any wealth management product.
contract not expectation
Another
Messy
Problem
Amateurs
Managing
Plebs
Always
Making
Predicaments
Amicus certus in re incerta
Alex Wade, provide an example of how you are supporting anyone that you have terminated? Calling to check on their mental health and offering counselling through Converge is not supporting someone. Supporting would be helping them find options / solutions, not withholding information they have requested so they can make decisions and actually telling all Practices what your plans are so that they can ultimately work out what to do. Also, providing careers counselling so that those you have screwed over that have no option but to go BOLR can find new careers.
I believe your plan is to wait until after the 31 October to provide the “Preferred” practices any information about the future to ensure that none of them negotiate with the small practices. You have purposely ensured that no one wanted to merge or buy these practices so that AMP can have these planners exit under BOLR, further reduce the price in unethical BOLR audits and then have the clients for their own employed planners so you can offer your ROBO advice and products that will only be available to clients of employed planners. I believe you are restricting competition for your own advantage and as a result the ACCC should be stepping in.
BTW How exactly did you expect any practice to be able to negotiate with another practice outside the network to buy their business or merge in a 12 week period. 12 months should have been given to provide notification not less than 12 weeks.
In addition, you refer to other licensees giving no time for planners to move on. Other licensees didn’t set a market value of 4x, lend to their practices on this multiple and then change valuations to 2.5 times, ultimately making it impossible for most to refinance. Other non AMP Practices had the options to move before hand so therefore knew what was available and also didn’t have to refinance their loans to change licensees. AMP Practices on the other hand had never explored the outside market because changing licensees was never an option available to them.
I don’t believe there would be a single planner with AMP who would want to stay with you right now.
“But realistically we are trying to retain the best advisers”….while going to war with them. Im sure your time at AMP will look great on your resume when they go bust in the near future Alex.
A bit of activism would go a long way here. For example, Allan Gray Australian Equity Fund bought into AMP recently as a “contrarian” position, advisers should be expressing their disapproval and letting the manager know directly. Allan Gray Australia claims to be in the process of becoming a signatory to the United Nations Principles for Responsible Investment (UNPRI). We should be calling them out for buying AMP stock. How in gods name could AMP comply with any principle of responsible investing?
Sounds like Pinocchio Trump is running the AMP. Goodwill down the drain!
Wade should shut up, he is realty digging himself into a hole.
How would AMP even know whether a practice is viable? AMP doesn’t even know what advisers actually do all day!
AMP products are awful. They are expensive and their online offering is appalling. The depths of their delusion is evidenced in the fact that AMP is saying they can deliver a sophisticated offering when they have failed at this repeatedly over the last ten years. Who remembers Evolve? Now they are spouting Advice 360 which is just a pile of garbage that no client will ever use.
Who cares any way. Lets all just abandon AMP and place our clients in products that are reputable.
I am not an AMP adviser and have not supported AMP products for a long time. But I feel for the AMP advisers. AMP is behaving unconsionably towards its advisers just like all these organisations behaved towards their clients. But no one is fighting on their behalf. It would be fairer if the fat cats at the top, halved their incomes as well at the same time as advisers were losing their businesses and what they had worked so hard for all their lives. It does not seem a fair contract where one party can change the terms overnight. No justice in this.
The key to these comments is this:
“…there were some THINGS we needed to deal with around legacy and we wrote them off ”
” I think the feedback and support from investors was strong”
De Ferrari and Wade are simply corporate ” agents of change ” with no empathy whatsoever.
What they are solely interested in in AMP’s share price and their bonus structure based on bottom line results.
Anything that gets in the way of this is destined for destruction.
Long term loyal AMP advisers are simply collateral damage to their objective.
When these 2 are gone from AMP after taking their excessive salary and bonus structure and have moved on to their next corporate challenge, the destruction and hopelessness felt by the AMP advisers will never enter their head for a second.
What an absolute disgrace.
their strategy to some businesses right now – buy books
I can cop the changes but where is the transition process? The fact that the changes were immediate with no consideration is what hurts. There is no hiding that amp could have managed this better. What we have is the disgusting bank culture at show. The fish rots from the head down… chairman down. Whatever Mr Wade says does not make their actions acceptable. It is immoral and disgusting how they have treated people. If I treated my clients that I way I would be in jail.
The advice community should be organising a widespread boycott of AMP and its products. Their insurance is monstrously expensive and reviewing and changing these products would pass the best interest duty with ease , AMP Capital products sit on many APLs as well. Licensees around the country should be teaching this monstrous organisation a lesson and restricting use of their products across managed funds, platform, insurance and cash products. We should also be asking active fund managers for a please explain if they hold this stock, how in good conscience could investing in such an unethical company be in anyones best interest? AMP dont respect consumers, they dont respect adviser snad their behaviour alone should disqualify them from APLs
So, what about other Advisers that are in negative equity under different Licensees. Isn’t the cause legislation, not specifically / just AMP?
I’m not an AMP Adviser nor am I affected by the completely unfair GR legislation passing through Parliament at the moment but I will say this…the fat cats and pollies making all these horrendous decisions ‘say’ they have empathy for the advisers now copping it in the neck but I have absolute confidence they don’t care one bit because its NOT their incomes, livelihoods or legacies being affected here. They continue to turn up to work each day knowing they still get their overinflated incomes.
If it were them being shafted and rimmed like advisers are now, it would be a completely different story. There’s no empathy here at all so don’t pretend there is!
I’m not sure a signed contract was just an “expectation” Alex? Maybe I missed that in law school?
I had an email from AMP about their core property fund just today. I’ll be emailing back the BDM and politely telling them that I will never again support a product offered by AMP. Suggest we all do the same?
I am normally very critical of AMP advisers, particularly those who bought up books of grandfathered clients expecting things to not change….. However, AMP trying to take the morale high ground here is unreal. I get Wade and Ferrarri didnt design and implement BOLR…. That doesnt mean they can just throw all these people under the bus as if they were never promised the 4x revenue bailout.
If that 4x revenue buyout wasnt promised, these people would have been AMP advisers. No doubt its hard enough with all the bad press, now this.
Very UNETHICAL AMP, shame on you!
More like a FIAT than a Ferrari.
I’m not a bank aligned adviser never have been, but my Lord AMP is never getting any business from any adviser ever again. PERIOD. Who would support this?