AMP Limited has acknowledged a deliberate run-down in adviser numbers amid higher than normal adviser departures as part of its full-year results announcement revealing a net loss of $344 million on an underlying profit of $486 million.
Reflecting shareholder concerns, the company also announced a $500 million share buy-back and maintenance of its dividend at 14 cents a share, franked to 90 per cent.
The company’s full-year result confirmed for the first time the reality of adviser departures driven by more challenging industry conditions and higher educational requirements.
AMP chief executive, Craig Meller left no doubt as to the underlying causes of the result stating that while there had been strong results from AMP Capital, AMP Bank and New Zealand and a “resilient performance” from Wealth Management, the wealth protection market had deteriorated in 2016.
He pointed to the fact the business had outlined its moves to address the wealth protection issues in an October ASX announcement including strengthening assumptions — something which had led to a one-off capitalised loss of $484 million while total experience losses for the year were $105 million.
AMP said while claims experience in the final quarter, capitalised and other one-off losses and the reduction in embedded value were all within guidance, AMP group’s earnings were also impacted by a $668 million charge for goodwill impairment as a consequence of declines in the potential recoverable amount of the Australian Wealth Protection business.
Looking at wealth management, the company said it had “deliberately reduced adviser numbers by tightening the classification of authorised representatives”.
At the same time it said a higher than usual number of advisers had decided to retire or leave the industry in the face of challenging industry conditions and increasing education and professional requirements.
The announcement also pointed to improved cashflows into AMP’s flagship North platform, with cashflows from AMP Flexible Super reduced as flows switched to North and Corporate super cash flows lower reflecting the lump nature of mandates.
It said AMP’s developing omni-channel advice network, campaigns to capitalise on a more favourable market environment, corporate super pipeline and further product enhancements were expected to support cashflows in 2017 and beyond.
