AMP current state of play, page-3

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oze_wolverine

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13/05/18

11:16

Post #: 33060373
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Originally posted by HAC30 ↑

The risks here to AMPs business are massive but many don't seem to grasp why. People outside the industry don't understand the amount of $$ AMP derives from grandfathered commissions/pre-opt in fees (these mostly fee for no service)... Many advisers within the AMP network have thousands of clients each due to these grandfathered arrangements and they simply cannot service so many clients. If the royal commission abolishes such arrangements, as evidence says they should, their wealth management arm will take a massive hit.

The budget proposals of abolishing exit fees also means that many people can now leave their old, crappy legacy products. People would have been out of these products much earlier if not for several thousand $$ exit fees holding them back from moving to reasonable alternatives. These products are regularly charging fees of 3%+, better options available less than 1% elsewhere.

Couple the above with reputational damage, class actions, advisers leaving in droves (with the requirement for AMP to buy them out at a huge multiple by BOLR and no longer being able to ring fence the books to maintain this revenue) and a less profitable life insurance environment, they pushing s*** uphill. If vertical integration goes all together, they will lose much of their salesforce/distribution network for their capital management business also.

David Murray is a comedic appointment, he pioneered vertical integration which has caused many of these issues in the first place. He will fight tooth and nail to maintain this archaic business model but the change in financial planning is occurring, long overdue.

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Can the advisers leave in droves? As I understand it, if they leave they are precluded from working for 3 years which seems unlikely unless they are prepared to retire and walk away

It's not clear and doesn't seem like things will be clear for quite a while yet.

AMP Price at posting: $3.73 Sentiment: None Disclosure: Held
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