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AMP's New Zealand renovation continues

AMP Wealth Management introduces flat fee for KiwiSaver funds and is buying financial advice businesses.

Sunday, August 15th 2021, 6:41AM 6 Comments

Last month AMP transitioned its KiwiSaver offering to a passive strategy managed by Blackrock.

Fees within the scheme have reduced significantly and the fee structure has been simplified by combining the management and administration fee into one single amount.

It has reduced fees to 79 basis points across AMP 11 named funds even though they have a range of risk profiles.

AMP's current default fund fee will remain at 39 basis points and its cash fund will also stay at 59 basis points.

Chief executive Blair Vernon says, in a statement, that with lower fees, and a range of market-leading services and digital tools, AMP KiwiSaver “represents real value for money.”
“It’s one reason AMP KiwiSaver Scheme members have an average member balance that is 17% higher than the industry average.”

AMP has also jumped on the sustainable investing bandwagon.

“Sustainable investing has been embedded into all AMP named funds, not just a specific single fund, with a focus on helping to reduce the impacts of climate change,” Vernon says.

“Contrary to some views in the market we also believe that doing good doesn’t mean sacrificing healthy returns, and in many cases, we’ve seen sustainable funds outperform their equivalent traditional funds.

AdviceFirst, which is majority owned by AMP, has bought three small financial planning businesses in the first half of the year.

AMP would not disclose details or names of the businesses it has acquired.

Its investor report declares it plans to “leverage AdviceFirst leadership position through practice acquisitions

It is looking to “seek further growth opportunities” through AdviceFirst.

AdviceFirst has nine offices and about 33 advisers, all of whom are salaried.

AMP Wealth Management - made a net profit after tax of $21 million for the six months to June 30 - an increase of 11% on the same prior period.
Its assets under management rose 9% to $13.4 billion although the company saw a net cash outflow of $257 million during the half compared to net cash inflows of $21 million in the first half of 2020, a factor it has put down to a heightened competitive environment.

Tags: Advice First AMP Wealth Management

« [The Wrap] Time to focus on fund manager fees?Booster invests into financial advice business »

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Comments from our readers

On 16 August 2021 at 12:19 pm Pragmatic said:
Let's work through the maths:

"11 AMP Funds now priced at 79bps". Deduct 7bps for Blackrock leaves a 72bp margin. Not a bad administration & distribution margin.

"AMP Cash Fund now priced at 59bps". I'm not even going to bother here with the maths - as it's fairly self-explanatory who's making the money from this transaction (think OCR at 25bps)

I suspect that this will be heavily scrutinized (or not) under the new regulatory emphasis of 'price' over 'value'...
On 16 August 2021 at 2:57 pm Contrarian said:
79bps for passive - must be the most expensive anywhere...! As for the disingenuous marketing campaign - all KiwiSaver funds have been saying 'No' to carbon etc, for about two years! Desperate times lead to desperate measures... What a farce.
On 16 August 2021 at 3:14 pm Gordon Gecko said:
@pragmatic, I think your 7bps Blackrock fee is pretty generous. Think more like 2 or 3 bps tops for the amount of FUM AMP have.
On 16 August 2021 at 4:34 pm An adviser who knows said:
Is the "average balance 17% higher than the industry average" because of superior investment returns or because they were a default provider scooping up clients from the very beginning?
On 17 August 2021 at 12:41 pm merv said:
ASB are also using passive investment via Blackrock I understand.

It would be intersting to compare the AMP and ASB fee levels.

If the AMP fees are as outrageous as the comments above imply what is the FMA doing about this ?

On 17 August 2021 at 12:49 pm curious of coatesville said:
If the fees are as high as the comments make out especially relative to similar passive funds then something should be done by the FMA.

If this as commented on then this would be an example of asymmetric information where the investor's lack of knowledge is being used to generate a profit.

AMP put an amazing spin on this but where is the quality journalism questioning the new fees ? Good returns are normally good at questioning these matters.

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