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More than $1 billion walks out the door at AMP

AMP Wealth Management reports an increase in profit, but also saw $1 billion of asset under management move to other providers.

Thursday, February 10th 2022, 1:27PM 7 Comments

Wealth management firm AMP reported an 11% increase in its net profit after tax to $42 million for the year to December 31, but says profit will be lower next year.

"Underlying net profit after tax is expected to be lower in FY 22 given margin headwinds and amended general insurance arrangements," the company says in its investor pack.

AMP lost around $1 billion in assets under management after losing its KiwiSaver default status, however the net position was softened by gains from strong investment markets.

Its net cash outflows during the year totalled $1.1 billion.

While the company lost KiwiSaver assets under management it says it is still  "a substantial participant in the overall KiwiSaver market with $6.1 billion in assets under management.

it also says it is a significant player in the corporate superannuation market with 36,000 clients and a 42% market share.

AMP continues to cut costs and says in the financial year they were down 5% to $38 million primarily due to lower employment and information technology costs.

"The business continues to simplify and transform its operating model and lower property costs following a reduction in office footprint." Its cost to income ratio fell from three percentage points from the previous year to 39.5% this year.

AMP Wealth Management New Zealand managing director Blair Vernon, was not available for comment, but said in a statement, "this is a solid result which reflects our strong focus on ensuring good client outcomes.

“In July 2021 we delivered a new investment approach with a focus on sustainable investing, which resulted in a material fee reduction for our AMP KiwiSaver Scheme clients of up to 40%.

“As part of the transformation, our commitment to helping reduce the impacts of climate change through our core business delivered an initial reduction of ~60% in exposure to carbon emissions across our entire investment portfolio.

“The transition to an index management investment approach and the appointment of BlackRock Investment Management will deliver ongoing value for our clients.

“Looking ahead we will continue to innovate our business including further enhancing and simplifying our products and services to deliver more value for clients. In the first half of the year this includes our intention to deliver a new digital only managed fund product, leveraging our state-of-the-art technology and our sustainable investment approach to help our clients continue to grow their investments.”

Tags: AMP Wealth Management

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Comments from our readers

On 10 February 2022 at 4:59 pm Francine Kerr said:
At a headline level not a bad result thru cutting costs to compensate for a shrinking client base. Shrinking to greatness?

But the actual real profit is a little different than the underlying headline.

Looking at the asx report I see this is underlying profit only before all the one offs. The NZ biz made underlying A$39m (kiwi 42m as reported on GR) and the 4 AMP units made A$394m (before the $38m cost of group office). But there are then A$608 losses from the group from below the line items. This means the actual AMP Group result was a loss of A$252m

So the profit for NZ is before all the extraordinary items such as client remediation.

Great spin
On 14 February 2022 at 9:17 am Pragmatic said:
Looking at the AMP debacle through a different lens: we operate in a relationship-centric industry where people are the difference. Those who forget are doomed to failure - with AMP management arguably the poster children to highlight this.
On 15 February 2022 at 2:59 pm s mcginty said:
Quote from AMP mentioned above is “Underlying net profit after tax is expected to be lower in FY 22 given margin headwinds …”

Is this an admission that their fees for passive are just too high?

Translation could be “advisers are important as client advocates so few advisers sell our high cost products. But some customers may catch on to our high margins and move elsewhere reducing management scope for bonuses and reduce profit”

Is there a role here for the FMA?
On 15 February 2022 at 4:17 pm d lythgoe said:
AMP NZ described as Denny’s food at Logan Brown prices.

They have a basic vanilla passive offer.

Good reflection on the NZ adviser model that few if any advisers place their clients here.

On 15 February 2022 at 4:27 pm howie said:
@s mcginty

Headwinds?

Methinks the storm already hit them and they were found wanting.

They seem to be saying they face clients gradually waking up to the high fees and walking.

If there is harm does the FMA have a role?
On 16 February 2022 at 3:25 pm wilf said:
On one hand it is amazing that a shrunk business like AMP still grabs headlines.

On the other hand it could be case study of mismanagement.

There is also the point of whether there is a role for the FMA to protect the customers still with AMP.
On 19 February 2022 at 4:15 pm p simone said:
Although many seem to enjoy the demise of AMP I look forward to the day when they no longer grab headlines.

The inexorable decline of the business means fund outflows is hardly news.

The only newsworthy piece is the high fees for what are now passive funds.

The recent adverts and emails are also very aggressive.

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