‘Formidable partnership’: AMP sells off licensee and practice holdings

In an ASX announcement on Thursday morning, AMP said it was creating a sustainable business model for advice through its new partnerships with Entireti (formerly Fortnum Private Wealth) and AZ NGA.

Entireti is set to acquire AMP’s advice licensees and Jigsaw for $10.2 million, while the bank will retain a 30 per cent stake. At the same time, the Azimut-backed AZ NGA will acquire AMP’s minority stakes in 16 advice practices for $82.2 million.

The partnership, AMP said, will create a “sustainable business model for AMP Advice” and transform the advice landscape in Australia.

Entireti will deliver comprehensive licensing and business services to AMP’s advice network and self-licensed practices, as well as continuing to service its existing licensees (Fortnum and PFS).

AMP Advice resources will transfer to Entireti, while practices will have access to capital to “enable planning for both growth and succession” through AZ NGA.

AMP chief executive Alexis George said the partnership is the “right strategic fit”.

“Over the past three years we’ve made significant progress in transforming AMP Advice into a sustainable, standalone advice business,” George said.

“We introduced a new service model, opened the approved product list, reduced operating costs and improved services to advisers which has significantly lifted adviser satisfaction. At the same time, we’ve considerably strengthened the North platform proposition to be compelling for both AMP advisers and independent financial advisers.

“It was important in choosing these two partners that they had a strong track record, deep experience, and shared AMP’s commitment to delivering quality advice to more Australians.”

She added that advisers will benefit from the “combined scale of these businesses, delivering new services and technology, with capital backing”.

“We are committed to supporting advisers through this transition and enabling them to enhance their value proposition for clients,” George said.

Entireti will establish a new joint venture entity called NewCo to acquire AMP’s financial advice licensees: Charter, Hillross, and AMP Financial Planning. It will also acquire its self-licensed offering Jigsaw.

The $10.2 million purchase will be 70 per cent in cash and 30 per cent being AMP’s equity stake in NewCo.

AMP said the practices within NewCo will continue to be licensed through existing arrangements and supported by Entireti services.

According to the announcement, the partnership will see Entireti become Australia’s largest financial advice business service provider, with over 1,300 advisers, and the NewCo joint venture will benefit from the scale efficiencies of this operating model.

Entireti Group CEO and managing director Neil Younger said the deal would create a “formidable partnership and an icon of excellence in financial advice”.

“We are excited to combine AMP’s high-quality advisers with our contemporary business model and proven execution capability to deliver meaningful outcomes for clients,’ Younger said.

“We are very experienced in transitioning licensees and practices into our model.

“This continues our journey to create Australia’s leading advice business services company, to support the growth of advice practices, and we are committed to delivering a seamless transition for AMP advisers and people.”

AZ NGA will acquire AMP’s equity holdings in 16 financial advice practices for a consideration of $82.2 million.

The initial focus of the partnership, AMP said, will be on a “seamless transition”, flagging that companies aim to maintain the current service proposition for AMP advisers.

“We are committed to Australia’s attractive wealth management market for the long-term, through our local affiliate AZ NGA, and this transaction will accelerate AZ NGA’s growth,” Azimut CEO Massimo Guiati said.

AZ NGA founder and group CEO Paul Barrett added that the firm is “excited to add 16 quality businesses that are focused on growth to our community”.

“This deal expands our national footprint and takes us a step closer to achieving our goal to be Australia’s leading professional services company,” Barrett said.

What does the deal mean for advisers?

AMP stressed that advisers could expect continuity of services and “retention of their community”, adding that minimising disruption for advice practices is a “priority”.

It said the partnership is committed to no changes to the terms or conditions for advice practices as part of the transition to the new ownership, including professional service fees, for a period of at least two years.

The announcement flagged “key management and employees” would transition to the new entity and there would be financial support to practices to “minimise impact of transition”.

Advisers will also have an opportunity to acquire equity in NewCo in the future.

AMP Advice group executive Matt Lawler said: “There is a real strength in combining forces. This partnership leverages the scale of bringing the businesses together, taking advantage of talent, expertise and experience of both organisations to deliver a high-quality professional service for advisers.

“It gives advice practices a clear path forward and offers them future growth opportunities.”

The Advisers Association CEO Neil Macdonald added: “This is a positive outcome for our members, who are all AMP advisers, providing them with a clear and sustainable path forward, with partners that are committed to advice and helping more Australians get the quality advice they need.

“We look forward to continue working with AMP as well as Entireti and AZ NGA to implement these changes.”

The transaction is due to complete by the end of the calendar year.

The agreement is subject to customary warranties and indemnities. In addition, AMP retains responsibility for inflight litigation relating to the AMP Advice business.

AMP said it would continue to employ salaried planners who deliver predominantly intrafund advice for its AMP superannuation members within its superannuation and investments business.