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[Weekly Wrap] The evolving face of AMP

This week's wrap is about how an old, long-standing company in the financial services sector is changing and how the market is changing.

Friday, August 22nd 2014, 1:38PM

Some weeks are notably much quieter than others. This has been one of those weeks - as long as you are not a politician, particularly a National Party one.

AMP has cropped up in the news this week. This is a company I find quite interesting at the moment as it is evolving away from its traditional, tied agency, life insurance business to something more, let's say contemporary.

Talking to managing director Jack Regan this was week, was interesting (as it always is). Part of the change is that with a higher tax impost looming for life insurance companies there is a need to grow other parts of the business. 

He runs a line that risk advisers are going to face change, and potentially big change, as these tax changes come into effect next year. Regan suggests that a good way to understand what is likely to happen is to look at the wealth management space. This has gone from having high margin retail products to ones with a much lower fee base, thanks to KiwiSaver.  Investment advisers are challenged with this change and few have really grasped, or embraced, the new KiwiSaver world.

Another observation he makes, and it appears correct, is that there is far less support for investment advisers from wealth management firms. Certainly this is true if you look back a long way and remember what companies like BT, Tower and ING used to provide. The lower cost structures, arguably, mean that there is less in the kitty to provide this support.

One mindset shift advisers will need to make if the trend continues is that AMP is developing a more diversified approach to its distribution. It has started to get involved with the IFA channel again and is actively recruiting advisers. The following is from its result announcement which sums things up well.

AMP continues to support a diverse range of advisers in their business and succession planning.  This is reflected in AMP’s new adviser recruitment.  The company is also supporting adviser businesses that are growing and undertaking a range of facilitated purchases of business to allow adviser exits and retirement in line with their own lifestyle goals."

It made me think about this phrase: Amicus certus in re incerta

AMP's other place in our news this week is around its goals-based investing and multi-asset investment strategies.  These are two areas which I am sure will be regularly in the news. Curiously this week Tyndall announced its parent company, Nikko Asset Management, had put together a multi-asset team in Singapore and this was an investment approach of the future. We will provide more on this, probably in ASSET soon. Tyndall MD Peter Lynn describes multi-asset investing as being a more advanced balance fund. People may struggle to understand the strategy to start with, but no doubt there will be plenty written about it.

Another fund manager in this space in New Zealand is Gottex, which is provided by Staples Rodway.

The goals-based idea AMP has in the market, to me, fits into this whole new space of post-retirement investment products. Again it will be one we hear a lot about over coming months.

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