AMP recently proposed a number of widespread changes to its adviser service and remuneration model that have the potential to become a model for the future or a reminder of the past.
The new system, set to be rolled out over the next three years, offers increased levels of remuneration to advisers who meet specified sales levels, as well as adopting business practices preferred by the AMP dealer group.
However, these changes also have other consequences that are being watched carefully by other dealers to see how the nation’s largest dealer group handles the transition.
Among these are that planners are looking to combine the business they write with other planners under one structure, so they can more easily meet the sales targets set by the dealer group.
Other consequences yet to be borne out are that those planners who agree to make these changes and receive the rewards for doing so, are meeting a defined benchmark as set by the dealer group.
Given the AMP changes are not compulsory, the potential exists for levels of planners to appear in the dealer group. Those who take on the proposals completely through to those who choose to be with the dealer group but not adopt any of the proposals. This would seem an unlikely result because those latter planners would not benefit at all. Such moves would also engender higher levels of loyalty, as planners are rewarded for progressing their businesses to the next level.
In this lies the beauty behind the changes. Instead of using a stick to drive planners to higher levels of compliance and education, AMP has introduced a carrot to each planner in a bid to do the same.
But it also ties them closer to AMP than ever before and in ways that are not easy to extricate themselves from, in the event the relationship with AMP goes sour.
These moves are probably also happening among other dealer groups and at the moment have not yet met any resistance because planners are keen to ensure that their businesses are compliant and operational under the new duo of PS 146 and the Financial Services Reform Act (FSRA), while being rewarded for doing so.
Whether they remain content under such conditions is now the question.
The industry left tied distribution style models behind due to perceived conflicts of interest and a push for independence. If new dealer group remuneration models threaten to reignite such issues, the fallout will neither be minor nor short lived, especially for those planners and dealers involved.
