Volatility and regulations hamper AMP wealth division

Weaker investor confidence, continuing market volatility, and advisers adjusting to constant regulatory changes has seen AMP Limited Australian wealth management net cash flows plummet to $209 million in the March quarter down from $342 million in the first quarter of 2015 (Q1 15).

AMP's cash flows and assets under management (AUM) results for the first quarter to 31 March showed external inflows represented around half of total cash inflows, which were $2.8 billion in Q1 16, down one per cent from Q1 15.

Total AUM has also declined since 31 December mainly on the back of negative investment market movements during the quarter, with figures down two per cent from $115.1 billion at the end of Q4 15 to $112.6 billion in Q1 16, while average AUM decreased by two per cent to $112.1 billion from Q4 15.

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Net cash flows on AMP's wrap platform, North, declined by 11 per cent from Q1 15, and stood at $820 million in Q1 16. Despite inflows rising by nine per cent from Q1 15, this was offset by a 25 per cent rise in outflows, which, according to AMP, reflected pension-driven AUM growth. Around 70 per cent of outflows were internal transfers, mostly within the North platform.

North AUM jumped to $21.2 billion at the end of the quarter, up 19 per cent from $17.8 billion at the end of Q1 15 and up two per cent from $20.9 billion at Q4 15.

Outflows from Genesys advisers leaving AMP was lower than expected following its closure, with a net cash outflow of $33 million during the quarter, but further outflows of around $350 million are expected during the remainder of the financial year.

The firm also reported declines in its wealth protection arm due to claims experience losses of $18 million, with most of that coming from retail income protection across incidence and termination.




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