Australia’s largest financial planning group,AMP Financial Planning, has announced a three year plan to radically overhaul its remuneration policy in what is being seen as a strategic shift in the way AMP advisers are rewarded.
The plan, revealed at AMP Financial Planning’s national conference in Canberra yesterday, will result in individual planners and planning group’s in AMP’s network rewarded not only for the income they generate, but for adopting what AMP is calling its ‘preferred dealer group business model’.
The preferred dealer group model includes advisers assuming closer marketing and branding ties with AMP Financial Planning, as well as demonstrating levels of acceptable competence in education, compliance and day-to-day business management.
AMP financial Planning managing director Greg Kirk says the new remuneration policy will be transparent and reward positive planner growth and development.
The carrot for individual planners and planning groups to adopt AMP’s preferred business model is twofold.
Firstly, a sliding scale for the dealer’s cut of an AMP adviser’s commission, ranging from a maximum of 25 per cent to a minimum 3.5 per cent, depending on the degree with which an adviser complies with the preferred business model, as well as the revenue they generate through net business flows.
The sliding scale will mean that, for example, a high-end adviser generating more than $500,000 in income a year, but who does not meet any of AMP’s preferred business model criteria, would pay a dealer cut of 12.5 per cent. A similar planner who meets all of AMP’s business model criteria would pay only 3.5 per cent.
And secondly, advisers complying with the AMP model will receive a better price for their business if they sell it to AMP through a buyer of last resort facility.
As part of the restructure, AMP itself will introduce a tiered service strategy, providing enhanced services to those it considers to be its leading individual planners and planning groups.
Kirk says the new structure was developed after a wide-ranging review of AMP Financial Planning’s operations and following extensive consultation with the AMP planner representative body, the Advisor Board of Management (ABOM).
He says although the transition to the new structure will take three years to complete, AMP is expecting to make significant progress over the next 12 months.
