Adviser spin-off 'good news for both sides'

AMP and its advisers could both be better off without agreements tying them to the business, commentators say.

Wednesday, June 26th 2019, 6:00AM

Tied AMP advisers have finally come to a deal with the financial services provider that will see them move on to independent contracts to distribute AMP products, and others.

It comes as AMP sells its life book to Resolution Life. It will be closed to new business but AMP says it will have a focus on retention.

AMP is retaining the wealth business as its own entity in this country.

Once the business has split, which still requires regulatory approval, all advisers will have two new independent adviser arrangements – one for insurance and one for the wealth side of the business.

It follows similar moves in Australia, where big wealth firms have stepped away from having their own tied adviser channels to work with independents.

There is seen to be more conduct risk in an aligned channel in which advisers did not have as comprehensive a suite of products to choose from.

Almost all the QFE advisers will move to new financial advice provider Wealthpoint, which will offer them compliance and support services. 

Wealthpoint chief executive Simon Manning said that group would initially work with the existing AMP product list, before shifting to a wider range of products with suppliers approved by a product committee.

He said it was just one of many changes for AMP and mirrored what was happening in Australia.

He said many people did not realise that the AMP product list at present had 50 providers on it. "There's been really broad choice for many years, I don't think that's been well understood."

Advisers used to be incentivised to place more clients with AMP because their retirement benefits were linked to the amount of AMP product written but Manning said that had not been the case for many years.

One adviser who did not want to be identified said the new deal would be a bonus for those who had been tied to AMP as it would allow them to deal with more competitive products.

AMP initially signalled the potential IPO of its New Zealand business, though it has since stepped back from that and is instead focusing on its long-term strategy here.

Adviser Graeme Lindsay said Resolution had a good track record of buying mature books, which were more profitable without the pressure of trying to add new business. He said some products could do with investment but they had been "there or threreabouts" even without significant change in recent years. 

Andrew Bascand, managing director of Harbour Asset Management, said aligned advisers “peeling away” was better for both parties, freeing them up to explore other distribution channels and products - so it would not be a negative for any IPO if one were to occur.

In a statement, an AMP spokesman said it was business as usual.

“We'll continue to distribute products through distribution agreements with advisers as well as through our employed advisers, direct channels and AdviceFirst business.”

Tags: AMP

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