AMP strategy, page-109

Basically that's correct.

Advisers have been paying 4x revenue to buy into AMP businesses/client books. They are buying these books, but they are actually still owned by AMP and need to be sold back into the AMP network upon leaving. They initially try to sell to another AMP advisers in the network but if they cant, AMP 'Buyer of Last Resort' means that AMP will buy the clients back off the adviser (in exchange for leaving the industry non-compete for some time) at 4x revenue.

So basically the 4x revenue has always been way too high but advisers have only done this due to the safeguard that they can rely on AMP buying the book back off them at that price. AMP have decided they dont want to do this anymore and many of these advisers have borrowed money through AMP bank with their homes as security to fund these purchases where the businesses are now struggling and AMP wont pay them back what they thought.

Now, is buying a book of (much grandfathered) financial planning clients at 4x revenue a good decision..? No. However, if this BOLR agreement wasn't in place, dare I say a huge amount of advisers would have never done this.

The issue for everyone here is that a lot of these books are grandfathered clients where the revenue is going to go to zero soon. The clients will be worthless if they havent been getting serviced properly and wont be happy to pay a fee instead. This leaves the adviser in the position that they just overpaid a heap of money for these revenue streams soon to cease and they cant get their money back or profitably continue their current businesses.

Plenty of stories going around that books have been purchased and clients contact details etc have been wrong so they cant even be contacted to be serviced etc. Thats another can of worms though and why I don't believe in building a business through acquisition, clients arent commodities but have been treated as such for years in the whole industry.