AMP has announced a shift to annual agreements covering people receiving ongoing financial advice.
The company announced the move today, saying it would rolled out next year at the same time as ongoing advice agreements are phased out for both aligned and employed advisers.
It said affected advisers were being informed of the changes today.
Confirming the move, AMP Australia chief executive, Alex Wade described it as a “a step forward in the evolution of AMP’s financial advice business”.
“We have been considering the best way to charge for financial advice and factored in a range of issues including client sentiment, pending legislative change, operational matters and increasing compliance requirements,” he said. “We think annual agreements best serve the interests of clients who want advice over a period of time.”
The AMP announcement said that at the start of an annual agreement, the client and the adviser would explicitly agree the services to be provided and fees paid – something that would expire after 12 months.
“Annual agreements will ensure optimum transparency in the relationship between clients and advisers, while simplifying administration and compliance for advisers,” Wade said, adding that the change was being introduced over 12 months to give clients and advisers time to adjust.
The agreements will be administered on AMP’s new technology platform for advisers, which will simplify set up and management and ensure high standards are maintained across the adviser network.
Comments
Yep. Sign them up for a $1,650 agreement for 12 months. Agreement then ceases. Then the client agrees to renew 3 yrs later. So on a small $100,000 portfolio, it still works out to be a very reasonable $46 monthly fee, over 3 yrs. Amazing how Commissioner Haynes has recommended the equivalent of selling up front phone contracts. Lol.
Hi Steve,
Not sure I follow your logic: If your clients don't renew in the second year - then you don't need to do anything - so your monthly rate should be zero.
For too long, the public have been seen as annuity income stream from advisers.
If they don't renew. sack them, cut all ties, and when they come back for advice charge them a new SoA fee.
Its not that difficult is it?
Cheers.
Marty.
You miss the point
$46 a month amortised over 36 months is the message not zero as suggested
exactly correct. The longer you defer the review, the lower the amortised monthly service fee. Unless you take the client off your register, they're still there for a future "review", whenever either party wants to. Which is pretty much how it works now. So unless the up front guys are only doing a "review" for say $295, the client ends up paying the same as they do now. What a joke. Short of some weekend cash like the old time stock brokers? Hit 'em up for one off review....lol
I think he hit the nail on the head actually. Contracts are for 12 month period only. If its not renewed on the anniversary date, ongoing advice fees get turned off. Simple maths.
The key is that there must be a SoA, of which at least 12 monthly repayments can be made, or one up front.
If the client wants a "review" say 2, or 3 or 4 years later, then that is when it will happen. There is no need for an "annual"
SoA review, if neither party agrees to it. But it still amortises out, if you pay up front. Show what a joke this is.
Hi Trevor,
I haven't missed the point. The monthly rate in year one is $137.50, and reduces to $0 in year 2 and beyond until they re-engage.
In year 2, month 1, if they have not renewed than you stop servicing them. simples.
MM
Welcome to 5 years ago for us. We had a hell of a time convincing A Magnificent Planning licensee that we were not obligated to provide optin and FDS notices if we provided our service on an annual basis only.
They also lost it when we wanted to use insurance commissions to pay for a clients wills and power of attorney.
Now that they have caught up... I wonder what to do next? Maybe get rid of fees from superannuation savings all together? hmmm...
AMP are desperate. A feel good press release to announce the intro of 12 month Service Agreements. What next? A press release to announce that they have actually provided some useful service to a client.
The real solution is to get rid of Opt-Ins. Lets face it, the Union Super fund advisers don't have them under Intra-Fund advice, and they still get paid each fortnight, regardless. What a joke. We are slowly educating clients on the ground about this scam too. The worm will turn eventually.
Standard 1: Act in accordance with the spirit – and not only the letter – of all relevant laws and regulations (including this Code).
They're doing this to circumvent FDS obligations. Breaching standard 1. In tax speak it's part IVa
They holding my investment we douth me informing that hey you raydan nead to trobole check something outer 2years oh my be you don't now you eligible for automaticpayment oh ok I'm in fanacialhardship and my family I Maite try helf Alltel bit bank ah THE RBA give me automatically can I a play what do you mean the gov say I'm intaitel bank seand oh why don't you contact the RBA ask them I heard that you bean inform no nothing her all bank same unser to me no and what do you mean
This change was dropped on us without notice today.Effective 1 March.Its an outrage.Where was the communication from AMP or our advisor? We are out of AMP asap.Should have done it ages ago.
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