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AMP opts for a fee for service model

AMP has decided not to wait for the ISI or the government to push advisers to a fee-for-service model and unveiled its own plans.

Monday, October 11th 2010, 11:24PM 2 Comments

Managing director Jack Regan says that from the July 1 next year commissions will be removed from its investments products sold through the AMP advisory network.

The change isn't directly for funds sold through independent financial advisers, nor are there any plans to remove commissions on life insurance products.

Regan says AMP could have moved to this position earlier but it was waiting to see if either the government or the ISI would move to mandate the removal of commissions.

"We thought there might be some move in that direction, but nothing seemed to be happening particularly quickly," Regan said.

It appears that although the ISI said earlier this year all its members would adopt the voluntary removal of commissions, progress was slow.

Under the new AMP model advisers would need to agree on a remuneration structure with investors. Regan says there are three possible models; an hourly rate; a fee based on funds under management or job fee.

AMP says it is not setting the fee levels, however it expects that market principles produce broadly similar fees across its advisers.

Regan says the move is all about making the charging relationship between the adviser and clients as opposed to being between the adviser and the product manufacturer.

Regan says the move will be on all investments made after July 1, investments sold before this date will be grandfathered. Therefore things like regular savings plans signed up before this date will be remunerated on a commission basis.

He doesn't expect that there will be a flurry of investment sales between now and then. While AMP has more than 350 advisers in its network the majority of their business was around life insurance as opposed to investments.

 

 

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Comments from our readers

On 12 October 2010 at 11:45 am Johnny Adviser said:
AMP was the first to officially make 'commission' a dirty word by adopting the term "payment statement" a few months ago. Funny thing is, I still call them commission statements.
On 15 October 2010 at 1:18 pm denis said:
I can't help thinking that this is not as ground-breaking as all that. As AMP says, the vast majority of their Advisers sell insurance only and they certainly don't seem to be busting a gut to get new investment business.

So in the same spirit, I would like to take this opportunity to announce that I will NOT be marrying Cameron Diaz.
Commenting is closed

 

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