AMP to sell off advice licensees for $10.2m

AMP has announced it will be selling its advice licensees and self-licensed offering Jigsaw for $10.2 million.

Entireti, which was formed as a parent company of Fortnum Private Wealth and Professional Financial Services (PFS), will acquire AMP’s advice licensees and Jigsaw, and AMP will retain a 30 per cent stake. 

This is for $10.2 million, 70 per cent in cash and 30 per cent being AMP’s equity stake, which will hold AMP’s three licensees and Jigsaw.

Secondly, AZ NGA will acquire minority stakes held by AMP in 16 practices for $82.2 million. The initial focus of the partnership will be on a seamless transition that maintains the current service proposition for AMP advisers, supported by continuity of AMP management and their adviser community. 

In time, AMP said advisers will also benefit from new services and technology backed by Entireti’s deep expertise and their growing scale.

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The firm said the transaction “expedites AMP’s drive to a sustainable advice proposition”, after a 12-month process assessing possible alternative models. 

The benefits of this particular option, AMP said, are that:

• Transaction expedites AMP’s drive to a sustainable advice proposition, after a thorough 12-month process to assess alternative models. 
• It provides a strong partnership alliance to deliver large-scale licensee and business services, leveraging Entireti’s proven and profitable business model. It will also enable future investment in modern requirements for the advice practices. 
• It also provides AMP ongoing equity participation and management influence in the NewCo joint venture.
• Limits future risks for AMP that are associated with running a large advice licensee.
• It realises the value of AMP’s minority stakes in a portfolio of advice practices and through AZ NGA delivers expertise and capital for future investments in advice practices.

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.”

AMP chief executive Alexis George added: “We believe this partnership achieves our goals and is the right strategic fit.

“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. 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.”

AMP said it will continue to retain salaried planners who deliver intra-fund advice for AMP superannuation members within its superannuation and investment business. 

The transaction is due to complete by the end of the calendar year 2024, subject to warranties and indemnities.

Entireti deal

As part of the partnership, 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 and Entireti will combine forces to deliver this scaled model, with AMP Advice resources to transfer to Entireti. 

Entireti will establish a new joint venture entity (NewCo) to acquire AMP’s financial advice licensees: Charter, Hillross and AMP Financial Planning, as well as its self-licensed offer Jigsaw, with AMP to retain a 30 per cent shareholding in NewCo. 

AMP Advice practices within NewCo will continue to be licensed through existing arrangements and supported by Entireti Services.

Entireti group chief executive and managing director Neil Younger said: “We are creating 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. We are very experienced in transitioning licensees and practices into our model.”

First-half financial results

In its results for the first half of 2024, the firm said underlying net profit after tax (NPAT) was $118 million, up 5.4 per cent from $112 million a year ago. 

The advice arm reported an underlying net loss of $15 million which was a 40 per cent improvement on losses a year ago of $25 million. It said adviser exits had "largely stabilised and there is a renewed focus on retention and acquisition of practices". Revenue per practice increased by 11.6 per cent from a year ago.

In platforms, underlying NPAT increased by 22.7 per cent from $44 million a year ago to $54 million driven by stronger market conditions and disciplined cost controls. Flows into the North platform from independent financial advisers increased to make up 35 per cent of total North inflows, a rise of 30 per cent over the year.

Average assets under management (AUM) on North were $73.1 billion, up from $67.3 billion, and managed portfolio AUM was $15.9 billion.

The firm declared a dividend of 2 cents per share, 20 per cent franked.