In the aftermath of AMP Limited’s dramatic announcements about the future of its financial advice business which accompanied the release of its full-year results, Mike Taylor interviewed AMP’s group executive, advice, Alex Wade.
MT: You’ve made some significant announcements around the financial advice business which have significant implications for advisers. How have you gone in terms of briefing those advisers?
AW: Obviously you’ve got some [advisers] who are more impacted than others and need to change their model or are concerned about their future, clearly, because of some of the announcements we’ve made and because of the impact they’ve had on certain practices.
And then we’ve got the other bucket [of advisers] who have been incredibly supportive about the need for change and understand the opportunity and the future and really want to be part of that future and focus on where we are.
We’re really focused on practices rather than on advisers and, the sort of practices of the future that are going to be more professional, compliant and more efficient to have the scale to pick up and pursue the changes.
MERGERS AND QUALITY PRACTICES
MT: Well, from the outside looking in, it looked like AMP selected particular businesses and had stakes in some of those businesses and that is how it played out. Is that a fair assessment?
AW: Clearly we’re focused on quality of business and a business model for the future. Now, that doesn’t necessarily mean that those businesses for the future are the ones that are shooting the lights out today. We’re really going practice by practice with them to see the future capability.
Now there may be some today that, frankly, aren’t profitable but we can see a path and we’re supporting them to the future with our business consulting support and helping them structure for the future.
It’s really about those businesses that are capable of digesting the industry disruption along with us and I think that we’ll obviously see some smaller businesses merge with bigger businesses and various changes like that.
For us, it is not about drawing an economic line in the sand across businesses but really determining how we retain talented advisers and minimise client impact and ensure best client outcomes.
IT’S ABOUT PRACTICES, PLANNERS
MT: Ultimately, of course, everyone wants to know about planner numbers. Money Management is currently undertaking it’s TOP 100 research. How many planners will you ultimately have in 12 months’ time?
AW: We don’t have a set target. Clearly our aligned network will reduce in size and I think that it is essential to have high quality and profitability but we haven’t put an absolute set target on it given the range of options we have.
As I said, we have many practices which see this as a huge opportunity to acquire talent, to grow their businesses and we’re looking at everything from geographic factors to commercial capacity to where we can rehome quality advisers.
There are loads of stats out there about impacts on the industry, industry disruption and [the Financial Adviser Standards and Ethics Authority] FASEA and what have you but, for us, it’s about ensuring we have strong businesses which we want to lead the professionalism of advice by partnering with those businesses in the future.
ADVICE ACADEMY AND THE FUTURE
MT: AMP has been notable in the industry for training and fostering people into the advice industry via mechanisms such as the AMP Adviser Academy. Will that continue?
AW: Training and fostering people into the advice industry will continue. We want to guide the industry and help lead that professionalism of advice. Clearly, we had a strategy in the past of being the biggest and now it’s about being the partner of choice and then growing a sustainable business together. We are investing heavily in the compliance space and through our digital capabilities and that is something which we hope will help the practices and their clients.
MT: You have mentioned digital capabilities. Does that entail utilising robo-advice or similar as a triage and then gradually moving clients through the system?
AW: Triage and then moving people through – 100 per cent. For me it’s about somehow solving advice for the masses and the reality and economics today of face to face advice is that it has become too expensive for the average person and we look to now have a greater serviceability and delivery to those clients.
And they can go up and down that model – they may be able to do everything digitally, they may be able to talk to someone on the phone or face to face, depending, and likewise they can go down [the system], for example, a high net worth individual may wish to be self-direct in the sense of knowing exactly what they want and how they want to do it and do it totally on digital if they want to.
APLS TO EMBRACE BEST OF BREED
MT: Are there going to be any changes to the way AMP approaches the development of approved product lists (APLs)?
AW: Our immediate priority is simplification of all our products. We simply just have way too many and that’s a legacy of our age and a few other things. We will simplify the product suite we have.
But for me it’s about having the best of breed or best of offerings for clients whether it be a product or a solution and that doesn’t mean that AMP will necessarily manufacture that product. Obviously, we believe that we manufacture very good products but in instances where we believe there is a client need that is not a strength of ours we will source that elsewhere.
MT: You’ve indicated that AMP will continue to grow adviser numbers. How will that work?
AW: Direct channels we will be growing and investing in our direct channels. Grow through stronger practices and stronger business models and our aligned practices will be able to use our digital capabilities.