AMP Limited is facing challenges on multiple fronts in the wake of having announced a strategy which will see the exit of significant numbers of aligned advisers and significantly reduced pay-outs from buyer of last resort (BOLR) arrangements.
The multiple fronts are actions considered by the AMP Financial Planners Association, individual litigation being mounted by planners significantly adversely affected by the BOLR changes and efforts by the Association of Independently Owned Financial Professions to have AMP advisers join their legal efforts to challenge the Government’s changes to grandfathered remuneration.
The AIOFP’s efforts were exemplified by its chairman, Melbourne-based academic, Adrian Raftery who has used social media to urge affected AMP advisers to join the AIOFP’s High Court challenge.
He pointed out that those who had borrowed had seen their LVRs go from 50 per cent to over 100 per cent.
Raftery’s urgings came at the same time as some AMP advisers told Money Management that the changes to BOLR had left them financially “under water” with businesses which had been valued at around $2 million (excluding debts) now being valued at as little as $200 000.
What is more, they claimed that the loans which had funded their acquisition of AMP client books had been provided by AMP Bank.
While outlining that the business intended to move forward with fewer but more productive advisers, AMP Limited has yet to detail the precise numbers likely to leave the business but it is believed that it could reach several hundred.
The company’s documentation released to the Australian Securities Exchange (ASX) this week pointed to the company scaling up its employed adviser channel, while reducing the number of aligned advisers.
It also pointed to 20 per cent of adviser practices accounting for around 60 per cent of revenue – a statement which was interpreted as confirming that AMP would be looking to part ways with smaller aligned practices which modest books of clients.
The AMP Financial Planning Association has not yet made public its strategy for dealing with the company’s radical changes, but is under significant member pressure to act.amp