Announcing its 2019 full-year results on Thursday, AMP chief executive Francesco De Ferrari said the year had been one of “fundamental reset” for AMP, while conceding that the exodus of advisers from the business and from the financial advice industry as a whole was “a big social problem”.
“We have taken bold yet necessary action to address legacy issues and de-risk the business. We have a clear roadmap for execution of our strategy and our focus is now on delivering,” Mr De Ferrari said.
The wealth manager attributed the lion’s share of its $2.5 billion loss for the 2019 year to further large provisions made for its advice remediation program, having agreed a further remediation policy with ASIC to cover advisers no longer active in its network.
Despite a 9 per cent increase in assets under management in its wealth management business to $134.5 billion, and a $9.7 billion jump in flows to its North platform, net cash flows for the year decreased by $6.3 billion, which AMP said reflected “ongoing reputational impact and strong competition”.
Mr De Ferrari said the exodus of 440 advisers over 2019 had been largely as a result of management action, following the controversial decision last year to lower the multiple of existing BOLR arrangements with advisers to 2.5 times revenue.
However, he said he did not expect a great number of additional adviser exits and that the company was ready to defend any legal action taken by affected advisers.
“We acknowledge that this is a significant disruption and it is not easy for any of the actors involved, so we are working closely with advisers to support them and we are mindful of the impact this has on clients,” Mr De Ferrari said.
“At this stage, the vast majority of advisers have made decisions about their pathway forward. We believe we were within our rights to reset the commercial terms and we will vigorously defend any type of action we get.”
He added that the business was focused on “professional, productive and compliant” advisers as it sought to reset its wealth management business for the future, but that the number of advisers exiting the industry remained an ongoing problem that would affect the accessibility of advice for consumers.
“I think this wider disruption is going to play out for the industry as a whole, we will see the number of advisers go down so it leaves me worried in terms of affordability of advice. We are heading for low rates, a lot of Australians are heading for retirement and with a lot of advisers leaving this industry, this is a big social problem that we need to start facing into,” Mr De Ferrari said.
Stay up to date with the latest industry news and insights! The ifa Business Strategy Day is specifically designed to help you prepare for your future in financial advice with the latest in practical, informative and business-building content. Last minute tickets available, book yours.
There were a lot of advisers out there that had been left behind by the industry and needed to move on but this has now resulted in a lot of very good younger advisers leaving the industry unnecessarily.
Not to mention those advisers that are left are having to halve their client numbers due to the amount of red tape and unnecessary work for no benefit you have to do and therefore having to double the fees so everyone is losing out of this
And what about AMP pushing people down the gangplank of the ‘goodship amp’ and making the advisers payback the loans pushed on them to fund purchasing the AMP’s plentiful orphan policyholders that they cannot service.. I know of some advisers heading to the bankruptcy court – good answer amp for the social side of things.
professional, productive and compliant” advisers is the minimum standard
…and this is the new “minimum standard” at AMP is it Gary/Andrew Sinclair? What was it before now?
Can you hear the drums, Fernando?
Are you suggesting that the practices shown the door by amp were not “professional, productive or compliant”? I would suggest that this kind of statement is defamatory and puts those practices into disrepute?
AMP is a rotting carcass. Look at the news today, massive $2.5 Billion loss, NO dividend for long suffering shareholders, advisers and policyholders bolting for the door and the new kid CEO flown in has been given a huge bonus and is on about $128,000 per MONTH!
Anyone angry out there?
The “big news today” of the 2.5 billion dollar write off was announced in August to the market. The CEO has not been given a huge bonus, he has had the opportunity for a bonus reviewed, its directly linked to company performance. While you might have had a point, it comes across as just being anti AMP because everyone else is on this site.
Sure there are angry people out there, rightfully so. But there is also a lot of crap and misinformation spread by people that clouds what is actually news, and what is just plain old negativity by the same old offenders on this site.
His bonus is hardly a bonus anymore — it did have decent hurdles in place when he started, now if he doesn’t die he gets it. Personally I wouldn’t be upset if this organisation went the way on Enron who were about as ethical as AMP is
Given the share price target in-built to his bonus, and you belief that he will 100% get it…I assume you are buying shares. “if he doesn’t die he gets it” …..full vesting if share price $2.75…even at the $2.45 share price, you would still be buying right? Did you read it?
See the ASX Announcement 21 Feb 2020 RE Change of Directors Interest Notice (AMP Shares: Ferrari) and note the number disposed on 17 & 20 Feb.
NOW he’s worried about affordability of advice? Don’t CEOs have an obligation to think through their actions before they make wholesale changes?
Not a chance anon perhaps the IFA should have a capability check on the CEOs and see how many ACTUALLY have qualifications
Their biggest problem is the senior management capability
Not one of the senior management team to my knowledge has an in depth knowledge of financial advice
So how can you turn a business around
Harvard 101
Don’t make a decision until you understand the potential consequences of this decision
A tip to Mr Ferrari if you don’t know the business surrounding yourself with subject matter experts that do not accountants and bankers
From Ferrari — At this stage, the vast majority of advisers have made decisions about their pathway forward.
It sounds much better than we forced people to make a decision which would financially destroy them at the risk of a worse outcome if they argued with us. I’m so glad he feels for the “actors” involved but I’d rather he actually helped rather than deliberately ruining people’s lives.
When is the money going to run out at AMP? Surely the river must be almost dry
You really don’t understand how the banks work if you think this is bankrupting them, lol
No comments in three hours or is IFA cutting back on reviewing staff?
Now it makes sense why they sold their insurance book. They needed the cash.
The Ancient Romans punished rebelling populations by ‘decimating’ them – they were put in a row and a Roman walked past and pulled out every 10th person and that person got killed.
AMP has expelled every 7th adviser. What would that be? Septimation?
What did these 440 advisers wake up and develop a conscious? Well if they did, I take my hat off to them. But which ones are happy to recommend the shittiest products on the marketplace for 20 years, with the crappiest customer service, with massive amounts of un-serviced clients but as soon as BOLR reduces…. there out of there. Of the 440, Just how many were given there marching orders, how many left because it’s AMP and how many left because the financial incentive to put themselves and AMP first has now been removed? That would be an interesting survey.
I and others I know who were salaried employees have left of their own accord. Who wants to be tied to an institution on the front pages everyday for all the wrong reason. Its certainly not just the aligned planners.
Fernando acknowledges that decline in number of advisers is a social problem. Yet AMP demonstrates no desire to address it. As an exited AMP Planner, AMP has prohibited me from working in the industry, even within the AMP network. That doesn’t help address the social problem, does it? AMP are just aggravating the situation for planners like me who want to help others that could benefit from financial advice.
De Farrari talks about the social problem as a third person rather than accepting he played a key role in the demise of a business model that worked for the provision of personalised service by small business. The staggering ignorance is that he does not have an alternative business solution. Higher net worth clients have very different needs to the smaller mum and dad clients. It is similar to the Brexit vote. All the proponents of change disappeared when it came to devising workable solutions. The collateral damage they have both left behind is a bloody disgrace.
We’re not with AMP but any clients that have any AMP shares we’re actively telling them to sell based on not only the likely downturn of both value and divs, but also we have no belief they will even be in existence over the next 5 – 10 yrs…
It depends. If they get the Life sale away (and then sell NZ) they will only have 2 Business Units: AMP Aus (Wealth & Bank) and AMP Capital. AMP Capital is worth something and so the value of the group as 2 Units probably depends on how big the negative value of AMP Aus is. If it’s a huge number then, with the incredible amount they over pay their staff by, they’re cactus.
Having been exposed to AMP Bank I’m concerned they are relying on them as a growth engine — I’d sell
AMP…as always, throwing shareholders good money after their shockingly bad decisions!
Glad to see this business is struggling after the grossly unfair way in which they have treated their advisers.
The only reason he has mentioned that no more adviser’s will leave AMP is because they have their hands tied with no options to leave. Most have not been worked with closely or have any idea of future path ways, as AMP have no procedures in place to help, shame on you for your pack of lies!. As soon as the planners have an option to leave, . hasta la vista baby!!
Just bullying by a big business – like changing the game rules at half time because you are behind. Australia’s largest credit union tried the same thing
Whilst sympathetic to a degree, AMP Advisers need to take a hit like the rest of us, don’t we? Reducing income (especially trail) is the result of changing regulations that have been on the cards for years, so many of us who bought books have taken a hit in valuations. The difference might be how long ago you paid 4x for an AMP book, given the writing clearly on the wall.
Insurance companies we made our contracts too good and now people are making claims = we decided we are not going to pay you that claim the writing was on the wall due to the high rate of claims we changed our mind…. this is your logic
“We believe we were within our rights to reset the commercial terms and we will vigorously defend any type of action we get.”
Here it is, the smoking gun.
Anything you have on a piece of paper means *F* all because they can reset the terms of the contract.
Contract isnt a contract.
AMP you are worth $0.0000000000000000000000
If I could kick you in the guts while you are on the ground, I would.