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[The Wrap] AMP lays out a bold future plan. Will it work?

AMP this week, arguably, laid out what has to be one of the most audacious plans seen in the financial services industry for a long time.

Friday, August 9th 2019, 6:06PM 5 Comments

by Philip Macalister

Here's the plan in a nutshell its strategy is: "to create a client-led, simpler, growth-oriented business. The strategy includes an intent to further localise AMP Wealth Management New Zealand (including its majority-owned subsidiary AdviceFirst) and explore divestment to realise its value."

All credit to AMP for having a crack at trying to reinvent itself and rebuild from what has been a bit of a train wreck.

A number of people this week have commented how it's sad to see an institution with a proud history for most of its 150 years get into the state it is today.

If they pull off this transformation and rebuild it will be a must-read corporate case study.

Many of the pieces are there to build on, but there needs to be changes, particularly in management. Financial services is a people business. A relationship business. Getting that right will be the first step towards success.

And of course product isn't far behind. AMP has left the life insurance space, where there are a diminishing number of players into the very competitive wealth management space.

This space has changed from the days of big providers with large product suites to one now dominated by niche providers with specialist products. 

When it comes to KiwiSaver we are in what I would say is the third wave. The first was a land grab; the second consolidation and the third the emergence of new niche players determined to pick off members from the large, institutional groups (aka banks). And remember, when AMP took over AXA it saw itself as becoming a big alternative to the banks.

One of the many interesting lines in the press statement yesterday was this one: "We will complete the renovation of our distribution channels, which includes the re-contracting of independent financial advisers while continuing to grow and strengthen our advice proposition through our employed advisers, both under our AMP brand and through AdviceFirst."

It's hard to understand what this means (and we have attempted to contact AMP). Readers of Good Returns will have seen that the firm's relationship with IFAs is not particularly good, and indeed is nearly non-existent.

For as long as I can recall the company could never decide it it was in or out of this space.

No financial services provider can succeed without distribution, and a firm like AMP needs something more than Advice First. 

With AMP advisers now unshackled from their former master and operating as an independent group, Wealthpoint, the company isn't likely to get the same level of support it had previously. 

AMP may see its future in the digital space, judging from this comment: “The completion of the repatriation of information technology services to New Zealand provides a state-of-the-art technology platform, which will enable us to respond locally to further enhance the digital experience for our clients, including the ongoing release of additional improvements to our online portal and My AMP app.”

It is interesting times ahead to see if a buyer can be found for the AMP wealth business in New Zealand. 

Tags: Advice First AMP

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Comments from our readers

On 10 August 2019 at 4:28 pm c ware said:
Agree prett much with the editorial. The share price at one stage a$28 or so and then over the years since the axa deal in 2011 fell from $6 or so to under $2. How management were able to deliver this at a time of growth in wealth assets and booming markets beggars belief.

It appears in NZ most of the exec who delivered the train wreck in recent years are still there.

Shareholders have been smashed, customers suffered from high fees and poor products. The winners - overpaid underperforming management.

Digital is prob the way but they are a bit late to the race. Suncorp have just announced a major downsize of their digital play after blowing heaps. However Suncorp had the benefit of well run adviser focused business.

On 11 August 2019 at 1:13 pm Pragmatic said:
The financial services industry is a relationship-centric industry that sits on a foundation of trust. Once AMP have re-established trust with the advisory community then they can focus on seeking ways to best exploit that. Unfortunately that will require a complete re-boot of philosophy - starting at the top. Until then, any grand plans & announcements are merely noise.
On 11 August 2019 at 2:29 pm bart p said:
Thinking about stakeholders (especially customers many of whom did not choose AMP but were allocated as default by the ird, employer or a previously tied adviser) I really hope AMP finally start getting things right. Like pragmatic I hope this is not simply more noise and AMP build relationships and improve on their offer.
On 11 August 2019 at 3:25 pm p barlow said:
Yeah hope they finally have it right for the sake of their remaining customers. I left the sinking amp boat some time ago but some good people hung on. Rather than the so called AMP wealth management a bigger worry is the risk business. The healthily lives are mobile and the remaining customers face a negative spiral. I hope advisers with amp risk clients including advice first top dogs think about the time to exit,
On 11 August 2019 at 4:41 pm Walter Wallcarpet said:
@ Pragmatic - both you and Phillip are on the money when you state that the industry relies heavily on relationships. Unfortunately with AMP that ship sailed long ago for both tied and independent advisers due to the command and control culture and a series of failures to deliver on promises.
One would have to ask why advisers would support a business which is so clearly preparing itself for sale. Customers are surely after longer term solutions
@ Phillip I quote "the company isn't likely to get the same level of support it had previously." I suspect that the company will get the business it earns and deserves

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