Opinion: The AMP BOLR saga and the last days of Rome
Next week’s class action against AMP may well be remembered as the final fight by aligned planners against structural shifts over which they are ultimately powerless.
Back in 2019 when I was editing Money Management’s sister publication ifa, I became a confidante to a number of AMP financial planners. While ifa had traditionally been a publication for independent advisers (given its namesake) the war between aligned and non-aligned advisers was basically over. AMP planners needed their story told and so I told it – warts and all.
The heart of the matter was AMP’s decision to change BOLR agreement multiples from four times to 2.5 times, thereby reducing the amount planner could sell their business back to the group for by 37.5%.
Most planners had taken out loans with AMP bank to finance the original purchase of their business. They felt a 40% devaluation was a kick in the teeth, to say the least. I took many calls from anxious planners who were audibly on the edge. As a journalist, I felt it was my responsibility to share their pain with the broader community.
The matter is now before the Federal Court. AMP has been instructed to provide key documents related to BOLR, including any text messages between former CEO, Francesco De Ferrari, and former advice boss, Alex Wade, by 4pm on 16 October.
Whichever way the final decision goes, it is a losing game.
AMP’s BOLR agreement is fast becoming another relic of an industry that has changed so significantly it barely resembles its former self. The Golden Age of Advice, at least for AMP planners and those who retired on recurring commissions, is over. The new era has not quite arrived, but it is on its way, and the economics of it are starkly different.
The future of financial advice is a far more open market, both for advisers, their APLs and for clients. Gone are the days of flogging branded products for fat commissions, selling your clients for four times their worth and then retiring to the golf course. We no longer live in that world.
My father was an airline pilot for Cathay Pacific. In the late eighties and early nineties, being a Cathay pilot was the best gig in town – great salary, private school fees paid for, profit share, full medical. Hell, even a housing allowance. But all good things come to an end. Today, being an airline pilot is far less glamorous, or lucrative, as it was 30 years ago. Dad continued to fly until he died a few years ago at the age of 66. He didn't cry foul when the conditions changed. He just wanted to fly.
Any occupation can be highly rewarding. It all comes down to the individual and their motivations. Many financial advisers are building a far more organic profession around the financial and non-financial lives of their clients. Client satisfaction is fast replacing business valuation as a priority for the practices in 2022, and as a result their business valuation is doing just fine.
AMP and other major licensees are hardly the enemy here. There isn’t really an enemy. It’s just the changing of the seasons. Licensees have a major uphill battle to try and turn a profit. I don’t envy them. Trying to make money from an AFSL is like selling face masks after the pandemic.
Any advisers still clinging to the good old days and fighting a crumbling system will continue leaving the industry in droves. It will take time, but a new generation will replace them. And memories of BOLR agreements and closed APLs will be met with disbelief by 30-year-old financial advisers who were attracted to a completely different profession.