How AMP plans to stem advice losses
AMP chief executive, Alexis George, has shared her thoughts on Insignia’s new ownership model and whether it will follow its footsteps.
Last month, Insignia announced the development of Adviser Services Co (ASC) which will be a partnership ownership model for self-employed licensees comprising RI Advice Group, Consultum Financial Advisers and TenFifty.
In its quarterly results, Insignia said: “ASC represents the ambition to create Australia’s largest adviser-owned licensee group, positioning it to capitalise on the dynamic self-employed advice market with the support of Insignia Financial.
“ASC will operate with independent management, oversight and governance with input from both Insignia Financial as well as key advice practice representatives.”
A few days later, Adviser Ratings speculated this could also be an option for AMP with an estimated one in three AMP and Insignia practices being attractive for this model as they have profit margins over 10 per cent and revenue over $1 million.
“The prospect of selectively choosing top-tier advice practices, particularly those they already have familiarity with, could offer AMP an advantageous edge in terms of visibility and comprehension of their licensed operations,” Adviser Ratings said.
In AMP’s quarterly results last week, the firm noted over 50 per cent of its practices within the AMP advice network are generating over $1 million in revenue.
Speaking to Money Management, George said: “We have been considering all propositions over a number of months now.
“The important thing for me going forward is the proposition has to be viable for us and for our advisers. We are still losing $50 million and that is not viable for advisers and not viable for AMP. We have to have a clear strategy in place to make sure that business can be at least break-even when considering something like the Insignia model.
“There’s many different propositions as we continue to transform. We can talk about greater adviser ownership in terms of our licensees. There’s many different things we could see.”
With the advice division reporting losses of $25 million in the first half of 2023, George said she is expecting a similar number in H2 to bring the FY23 advice losses to $50 million. In FY22, the advice division lost $68 million.
“We want all our businesses to stand on their own two feet and our advice partners do as well, so we have a way to go there still in terms of focusing on technology and listening to our advice partners about the services they value and which they don’t.
“The third element is more related to AMP as a whole but we have to rightsize the organisation for who we are today, not who we were, and the benefits of that will flow through to advice as well.
“Since [managing director of advice] Matt Lawler has come in, we are rebuilding trust which we had lost a lot of before.”
AUTHOR
Laura Dew
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Conduct an orderly exit and pay out shareholders. Prior management has killed the brand, the only good thing to do is put the zombie to rest.
I wonder how many advisers would pursue a deal with AMP given the BOLR dispute.
ha ha, who would want equity in a business that at best only breaks even?? If they buy into that there must be a hidden payment or they need some better financial advice. It will also be a significant reduction in services when the advice has to fund an additional $50 million. It seems Insignia and AMP are treating their advisers or the regulator like idiots, and the industry watches on powerless or hopeless.
Say what you will, do what you want AMP. No adviser will forget what you did and how you broke faith with advisers for the sake of a quick buck.
I truly wonder what these deluded so-called 'executives' think they are doing each day at work with AMP. Is Alexis George and her ilk detached from reality, drinking extra powerful kool-aid or just hopelessly positive for no discernible reasons? How could anybody in their right mind possibly even begin to think AMP has a future in Australia after their rabid and disgusting corporate behaviour over the past many years? The way they treated clients was bad enough but what they did to their decades-attached loyal adviser network was beyond anything you could make up. The ruined family businesses, hope thrown into the gutter, adviser suicides and ruined families - I won't go on. There's only three words appropriate for AMP over the next 5 or so years . . . arrange, deckchairs, Titanic.
I'm sure any contract they put to their advisers will bring the same joy and trust as the previous contracts.
Having a lot of legacy on the North platform (and actually thinking its functionality is decent) I've been desperate to give AMP the benefit of the doubt and for them to change their spots and move forward/improve.
But I just can't see how thats possible now. The platform just announced fee changes (a hike for most), almost weekly they are in the press for something bad and there is just no light at the end of the tunnel.
Honestly - I think its time they just broke off/sold the remaining arms to competitors, liquidated the company and put this thing to bed once and for all. All of the other providers have their own level of suck but AMP is just way to far ahead in the race to lose all possible brand credibility.