AMP blasted for recruiting advisers after mass terminations

AMP chief executive Francesco De Ferrari fronted the House standing committee on economics on Thursday, copping questions about the recent sexual harassment scandal and adviser unrest amid the group’s BOLR (buyer of last resort) changes.

Committee chair and Liberal MP Tim Wilson, Liberal MP Celia Hammond and Labor MP Anne Aly all referred to emails they had received from AMP advisers, complaining about the BOLR reforms and the group advertising vacancies for new advisers.

Dr Aly asked Mr De Ferrari to confirm if AMP is currently in the process of recruiting advisers, to which the CEO said he did not know.

“I would need to come back to you. Our key focus currently with our advice business is to make sure that we work through remediation, that we define how to set up an advice business that is fit for the future, where we can provide accessible, professional and compliant advice to more clients and we are working significantly on improving technology, migrating our clients to annual agreements” Mr De Ferrari said.

“In … our network reshape, you would have seen the number of our advisers effectively come down.”

But Mr Wilson intercepted, having opened AMP’s website and seeing the group has advertised advisers can join its network.

“I guess in any type of commercial salesforce you would always look for renewal,” Mr De Ferrari said, after Dr Aly asked him to comment on the adverts.

“We need to bring in new talent, there are new professional standards that are being applied with FASEA. And so I do not see anything incongruent with the fact that as you try to transform an industry you need to bring in fresh new talent as some of the older practices effectively leave the industry.”

AMP shed 270 advisers during the first half of the year. In 2019, 440 advisers left the group.

The group started to give marching orders to advisers a year ago, as it signalled it would be reducing its network. Hundreds were said to receive a termination letter in August 2019.

“My question is based on communications that I and other members of the committee have had from people who have had their practices terminated, who are now asking, how many have you terminated and if you terminated however many that is, why are you now advertising for new ones?” Dr Aly said.

Mr De Ferrari answered, “In a commercial network, you’re always looking to bring in new resources.

“It would be the same with employees.

“The fact that we actually have employees leaving the company shouldn’t mean that we shouldn’t be out on the market hiring new ones.”

Dr Aly fired back, saying, “I wouldn’t terminate an employee if they were doing a good job and then advertise for a new one, would you?”

Mr De Ferrari said no, but the group is still looking to reshape the advice business to make it viable.

“We analysed all the different practices, how they meet professional standards, how they meet compliance, how they’re running a sustainable practice, and some of these practices are really not sustainable,” he said.

“And so for us, it’s an issue of giving people the choice. We have actually given people lots of different avenues: they can sell the business back to us, they can go and join a competitor or a different practice, they can merge with another practice within our own network. We have proposed a whole series of options and solutions for them to choose.”

The MP asked what the group is offering business owners who have “invested their lives” into their practices, to which Mr De Ferrari referred to the options again.

Businesses that are made up with one or two advisers will not be able to survive the coming industry reforms, the chief warned.

“It’s been my experience where I’ve seen this in a number of other countries,” he said.

“Because of the compliance standard, the need to invest in technology, the education standard and all the other disruption that’s coming doesn’t really make a one person practice very sustainable.

“So, that’s where we’re asking people, if you want to continue to do this job because it’s your passion, you can try to merge with another practice. You can sell your book back to us and we can on-sell it to somebody else or you can find a new home if you actually want to continue this by yourself. So, we’ve given them all the options possible.”

A number of AMP Financial Planning advisers launched a class action against the wealth giant in the Federal Court in July, regarding the BOLR policy changes.