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.”
