AMP to increase advice practice fee

AMP will be incrementally increasing its Australian financial services licence (AFSL) fee from 1 January, 2022, for 18 months as part of its new advice service model.

Speaking at a media briefing, AMP managing director of advice, Matt Lawler, said there had been a reprice in the marketplace for AFSLs. 

“That repricing for risk and a repricing for the fact the economics of running an AFSL cannot and should not include product revenue,” Lawler said. 

“We’ll be transparent and competitive about those fees” 

Lawler said the fees would be phased over 18 months from 1 January, 2022, so the full impact of the fee would not be felt by advice practices until 1 January, 2023.  

“Those fees are benchmarked against the market and we’re below what we survey as the current average in the market today.” 

When asked whether the increase would flow on to retail clients, AMP chief executive, Scott Hartley, said “absolutely not”. 

“…We have to remain competitive in advice fees that we charge. We can’t just go ramping up fees because advisers will rightly walk away from us. We are intending that we will deliver licence services profitably and sustainably into the future,” Hartley said. 

“We have to competitive with the leading providers in the marketplace whether it be a wrap platforms, master trust, super, or in banking, we have to be leading in that respect as well. 

“The fees in advice have to be appropriately competitive with other AFSLs as well which we benchmark. We’ve set them below median so they’ll be competitive fees in the future for AMP advisers. Members, customers, and advisers will all get competitive fees.” 

On removing their buyers of last resort provisions, Lawler said it was a way to move into a more uniformed approach to how businesses were bought and sold and how market valuations took place.  

“Today there is a well-formed market for the buying and selling of financial planning businesses. You don’t need an institution like an AMP to put an artificial multiple in. People can buy and sell businesses quick freely in the marketplace,” he said. 

“In fact, some of the market multiples are more than the current multiple is… That doesn’t mean we’re not interested in succession planning and practices trading businesses.  

“We’ll still be close to the businesses we work with so that we can facilitate those transactions, but they will be done at market valuation. The offer will be put into the market and advisers out there that will bid for that market.  

“That is operating like another financial planning in the market and how every other small business in the market operates.” 




Recommended for you

Author

Comments

Comments

The costs won't flow on to clients....yeah ok, so you're just telling your advisers to expect lower margins in the future, nice one.

I totally agree Bozo, Lawler is deluded to expect the practices to wear a licensing cost increase, and not pass any of this onto clients.

I cracked up over a coffee this morning reading this, then realised AMP was serious about the costs not flowing on.

Of course the increased costs will flow onto retail clients. Not by what the fund manager (AMP) charge but by what their AFSLs and their ARs will charge. Does AMP really think the Practice Owners still with them are going to wear these cost increases all the way to bankruptcy ?

“Those fees are benchmarked against the market and we’re below what we survey as the current average in the market today.”
If I was an AMP shareholder I'd want the fees to be based on carefully considered economic assessments. If your cost to serve is greater that what you've benchmarked then its more bad news. The industry needs AFSL's to be healthy and in a business sense that's profitability.

AMP may well have "benchmarked" its adviser support fees against IOOF and other large licensees. But the point they are missing is that the cost of advice processes required by large, bureaucratic, licensees focused on defending an inhouse product agenda, is far greater than that required by a simple, self licensed practice without all that baggage and complexity. I suspect AMP didn't "benchmark" against those types of practices.

When asked whether the increase would flow on to retail clients, AMP chief executive, Scott Hartley, said “absolutely not”.
Do they not understand how a small business works. Are they expecting each small financial planning business to absorb the costs AGAIN?

It is plain wrong to claim fees to clients won't increase. Hartley can set product prices, not advice fees to consumers. Being fair, it is hard to shake the product mindset.

I'll look forward to them cutting costs by leaving the leased offices in the CBD's and rehousing themselves in airconditioned sheds on the outskirts . If they are out there helping adviser practices as much as they say, they don't need flash offices to service advisers.

Does Scott Hartley know how practices operate.....also why so many changes before the new CEO comes in. Why is Scott pre-empting so many changes without consulting with the new CEO.

Also with so many staff cuts, AMP's offices are now a waste of floor space.

If the local store gets a price increase on its goods, it increases the cost to consumers to keep its profit margins. If I get a cost increase from my licensee I will do the same and pass this onto my clients. Seriously delusional if anyone thinks this is not the case

I am a AMP aligned adviser and by 2023 my licensee fees will double, yet they now expect my Practice manager to serve 119 advisers instead of the current 30 (due to sacking so many PMs) More take less give!

Why do you need an AMP "Practice Manager" at all? Their role is to help you navigate AMP's excessive bureaucracy, and to push more AMP inhouse product. Those things are not actually part of financial planning. Get away from the big vertically integrated licensees, and you'll find out how much simpler and cheaper real financial planning actually is.

What a bloody stupid statement from a so called economic success “Will not get passed onto the client !” They must de completely delusional or think we are all just going to say “ isn’t that great “
Really ! Talk about ignorant and greedy

When asked whether the increase would flow on to retail clients, AMP chief executive, Scott Hartley, said “absolutely not”.
Come on Mr Hartley, you are not serious. So who does wear the extra $40,000 to $100,000 (or more) annual increase? The business owner who is only taking $80,000 per year as an income? Of course it has to mean an increase in fees - after that is what you a re doing at AMP, by increasing our licence fees. Just answer honestly! That's what Australia wants from AMP - after all, in your own words "“That is operating like any other financial planning in the market and how every other small business in the market operates.” Of course fee will increase. Either that or FP businesses will fold, and that wont be good for clients either.

Wow, apart from all the other comments, why did I get to find out about the increase in fees from Money management 2 hours before an email was sent to advisers, talk about TACKY. and the Youtube has the comments section switched off, can't take criticism?

They also forgot to mention the increase in software fees, Sales farce is free at the moment but will increase to over $10k a year, Xplan is no longer subsidized, so there is another 15 to 20k a year (and with AMP the software is compulsory)

I dont know who they are comparing too, but of the 5 licensees I have contacted, none of them have anyway near the $100k I will be paying in fees.

How about training in Salesfarce? (the reason given it costs money to train people and therefore it is up to you to train yourself)
I hope every adviser associated with AMP, stops writing any AMP product, no loans, no AMP capital and refuses to do their audit until they come back to the negotiation table.

I hope ASIC looks at what AMP management are doing to damage the AMP brand and destroy shareholder value and policy holders confidence. For too long AMP advisers have had to lie to their clients saying AMP is OK.

Two questions if I may kirby:
- Why do AMP advisers need both XPlan and Salesforce?
- Have you looked into getting your own licence?

I think it's a bit too late for ASIC to look at the damage to the AMP brand or the destruction of shareholder value.

Yes looking to change licensees, you can have xplan by itself, but sales force gives you the option to produce annual advice agreements and track them as a CRM. The bottom line is my fees have gone from just over $50000 a year to $117100 a year (if I want my staff to have access to salesfarce and Xplan), so either I up my fees to clients to cover these costs or go to another licensee

$120k a year to have your business highly associated with AMP. Bargain!

IOOF will also move it's fees much higher in 2 years for the MLC practices acquired, they have a range of fees and also a potential % of revenue on top - 100K is feasible as an outcome of all of this in 2 years. Between AMP and IOOF you can either a significant increase in self licensing at that point, even if you don't want to, it will need to be tried for economic reasons AND/or the number of advisers in business are headed to more like 8-10K.

The cost issue with AMP and IOOF is not simply the price of their "support", it is that their model requires you to use an excessive amount of over complicated processes and services... to make things easier for them!

Move to self licensing and you'll find there are much cheaper and simpler ways of doing things, that are actually more compliant than the bloated, inhouse product focused models of the dealer groups. Apart from the actual licensing, every other service provided by dealer groups can be purchased from independent providers on an as needed, right sized basis. This includes compliance support.

The cost increases being mentioned make self licensing a viable alternative. And don't believe the lies from the big licensees. You will be more compliant, be better able to operate purely in client best interest and avoid the moronic box ticking that comes from the large institutions. Best of all you're not tainted with the same brush, noticing AMP is in the news again today.

That's most likely the idea from AMP. Those lower tier advisers that recently survived the cut will probably leave, potentially self-licence. Larger practices that AMP have bought into will stay.

announced today AMP advice made $48 million profit, so why do they need to double licensee fees?

Add new comment