De Ferrari claims victory in AMP transformation

In AMP’s annual report released on Wednesday, Mr De Ferrari said following the announcement of the controversial transformation strategy in late 2019, the group had aimed to “create a simpler and client-led business which would deliver growth to shareholders again”.

“In our first year of that strategy in 2020, we achieved 90 per cent of the objectives we set,” he said.

“We completed the sale of AMP Life and took the decision to retain our New Zealand wealth management business and grow it. We accelerated the simplification of our superannuation business and pushed forward on a challenging reshape of our financial advice business.

“We have also set our bank up for future growth through the successful renovation of our core banking platform, and we continued to improve our wealth business and see growth in our North platform.”

Mr De Ferrari said 2021 represented “an opportunity for us to take our company forward with the same commitment, hard work and resilience shown by our people in 2020”.

“Australian wealth management continued to consolidate and strengthen practices to improve the productivity and quality of advice,” he said.

“While we face ongoing headwinds in wealth management in Australia, we are responding and we are focusing on driving earnings growth in both the bank and the platforms business.”

AMP said 75 per cent of its “advice reshape” program had completed in 2020, with the rest due for completion in 2021.

“We will deliver technology solutions to enable practice efficiencies, increase advice accessibility by uplifting our phone-based advice capabilities and continue our support for our adviser network as we complete client migration to annual advice and service agreements,” the company said.

AMP said around 85,000 clients had been transitioned to annual agreements so far.

The group addressed its declining adviser numbers as positive for its overall wealth strategy, stating that the 37 per cent reduction in practice numbers to 595 and 26 per cent reduction in adviser numbers to 1,573 was part of the “move towards a more professional, compliant and productive network”.

AMP also flagged its remediation program was 80 per cent complete by the end of the 2020 year, with a total program spend of $405 million to date and an additional provision of $68 million made in 2020 relating to “recognition of additional lost earnings and other legacy advice matters”.

However, despite the apparent success of AMP’s transformation to date, remuneration committee chair Michael Sammells said the company’s performance “remains significantly below plan”, and short and long-term incentive payments for Mr De Ferrari and key management personnel were not appropriate for the 2020 year.

“Remuneration outcomes for our key executives have been adjusted to align with the shareholder experience,” he said.