AMP increases focus on digital distribution

AMP exits aligned financial advice channel and plans to launch new funds and focus on a digital strategy.

Monday, December 6th 2021, 7:43AM 6 Comments

AMP Wealth Management is expected to generate less profit in the current financial year as it battles margin headwinds.

“Wealth management revenues in recent years have been impacted by margin compression following heightened market competition (particularly in KiwiSaver) and increasing regulatory focus on fees,” AMP said in an investor presentation last week.
The road to increased profits is limited as the business is already “operationally efficient business, with a high return on equity and low cost to income.”

“There is limited scope for further cost out with bottom line growth to be driven by improved investment performance and cash flows.”

It says it has continued to simplify it operations through automation and digital transformation" and has reduced its its customer services operations by 30%.

The company says it has "repositioned distribution to be predominantly direct to market via employed advisers (AMP and AdviceFirst) and fully exited aligned advice."

AMP plans to launch new unit trusts in the first half of next year, "leveraging investment in automation and (its) BlackRock partnership."

Like many other managers it is focussing on sustainable investments "reflecting New Zealand market dynamics.

Earlier this year AMP moved $9.6 billion to BlackRock as it shifted from active management to a passive approach.

 

 

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Comments from our readers

On 6 December 2021 at 1:58 pm Pragmatic said:
AMP may as well go direct, as the majority of industry participants won’t touch them
On 7 December 2021 at 8:14 am Backstage said:
I think saying AMP has repositioned distribution sounds great. Makes it sound like they did it. I think the adviser market repositioned AMP years ago. It appears like the strategy was brand destruction and service erosion Automation is a great idea as robots will turn up to work.
On 7 December 2021 at 2:44 pm confused and curious said:
Does anyone think AMP are charging a lot for a passive approach compared to peers. If so no wonder they have no one external left to distribute for them.

On 8 December 2021 at 5:47 pm Amused said:
@ Backstage - great comment.

I understand that there is a new biography coming out next year titled "AMP - How to take a financial services brand of 170 years and destroy it".

No doubt it will be a best seller amongst advisers even though we already know the story.

On 10 December 2021 at 8:27 am Backstage said:
Yes Amused and in the book will be a couple of chapters on, myopic arrogance and how to have senior managers that all agree with each other as if you have any ideas that will take the business forward and it relates to change, well you can leave as thats contentious and threatens my cushy job. Also a chapter on adviser relationships and the company knows best (despite no one in the company ever having been an adviser). The book will contain so many valuable lessons on how to just keep charging forward into obvious danger whilst maintaining an arrogant position. A real sad tale actually.
On 14 December 2021 at 5:47 pm Amused said:
@ Backstage - sounds like you might have yourself an advance copy there already!

The chapter on AMP's relationships with advisers will be particularly illuminating.

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