Advice revenue drops 60% at leaner AMP

In its half-year results presentation on Thursday, the wealth giant said its “advice reshape” program launched under previous chief executive Francesco De Ferrari was 95 per cent complete, following the launch of a new model for authorised representatives last month that saw the group remove its BOLR scheme and release clients from institutional ownership.

AMP pointed to increased practice productivity and scale as a key metric of success for the transformation strategy, with average adviser numbers per practice having increased from 2.4 in 2019 to 3.3 in 2021, and just 34 per cent of practices now one-man bands compared to 54 per cent in the first half of 2019.

The group said it had stripped $13 million of costs from the wealth management business compared to the first half of 2020.

At the same time the transformation strategy combined with changes to remuneration regulations hit AMP hard in the revenue department, with the group recording a 63 per cent drop in advice revenue compared to the first half of 2020.

Total advice revenue for the first half of 2021 was $23 million, down from $52 million in the second half of 2020 and $63 million in the first half of 2020. The wealth management business as a whole saw net outflows of $2.7 billion for the first half of 2021.

AMP also flagged the file reviews for its remediation program were complete, with costs having come in 6 per cent above the original estimated cost of $778 million. Around $500 million of this was to be paid out in client refunds, with the rest attributed to the program costs.

The bulk of client refunds were for fee for no service, with $175 million paid to date and the remainder to be paid by early in the fourth quarter. Refunds for poor advice amounted to just $45 million, $5 million of which was still to be paid.

In addition, the group said it would look towards “sale or partnership opportunities” for its employed adviser business, where efforts had been focused on building out phone and digital-based intra-fund advice capabilities.

In a media call on Thursday, new AMP CEO Alexis George praised the “pleasing progress against our 2021 commitments to simplify super, reshape advice and grow our bank and platforms business”.

“I think we have a solid foundation to work from and a clear set of priorities in the near term,” Ms George said.

She added that the focus around stemming outflows from wealth management would be continuing to reinvigorate the proposition for AMP’s North platform and boost its competitiveness with non-AMP advisers.

“The team has done a lot in making sure we’re priced competitively and there’s a lot of enhancements coming through,” Ms George said.

“We want to broaden that offering to the external adviser market because it’s been more focused on advisers that have been aligned to us.”