Ann: Dividend/Distribution - AMP, page-88

"Bell Potter has raised their target price 8.3% to $2.60 this morning."

Bell Potters' view on IFL versus AMP (From AFR 10/8/20)

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However, while the headlines tell different stories, analysts believe the two companies still face the same headwinds.

In fact, Lafitani Sotiriou of Bell Potter believes AMP's transformation is actually going more smoothly, notwithstanding the company's admission that profit will fall by 50 per cent for the first half of 2020.

Having long been bearish on AMP, and having correctly identified the regulatory risks in the vertically integrated models of both companies even before the royal commission, Mr Sotiriou recently switched his recommendation on AMP to "Buy".

While he agrees there are "media items" distracting from its revitalisation, his assessment is that the worst is behind AMP and its dirty laundry is on the table, meaning investors can more accurately measure its progress.

Rather than being better behaved, IOOF has just been "less transparent" about its problems, he says.

“For example, AMP has provided more detail on its platform and product consolidation, advice revamp and has put numbers around it,” Mr Sotiriou told the Financial Review. “Whereas [IOOF] talks about an advice revamp but doesn't actually tell you what it's doing. It talks the talk but evidence is very different.”

Moreover, Mr Sotiriou has concerns about the comparative progress each company has made on remediating aggrieved customers. While AMP is on track to complete 80 per cent of its compensation by the end of the calendar year, IOOF had yet to "refund a single cent" at the time of its last formal results in February.

AMP's biggest achievement over its troubled recent history – the successful sale of its once-core life insurance division to Britain's Resolution Life – often gets overshadowed by the scandals.

But Mr Sotiriou believes it is an important one, providing the balance sheet strength for AMP to stage its reforms.

Conversely, IOOF carries "a lot of debt" from Mr Mota's flagship acquisition and integration of ANZ's wealth business, he says. That project is starting to create its own problems, with an additional $80 million in remediation costs identified in the acquired business over the past quarter.

An under-the-radar process for parting ways with former ANZ advisers could also spell trouble. Mr Mota swears the "off-boarding" of 12 firms because they are considered "sub-scale" is meaningfully different to AMP's controversial adviser cull, but critics (and litigation lawyers) will no doubt be watching closely.

Mr Sotiriou's bullishness on AMP is an outlier position. According to Macquarie, consensus on the wealth giant among analysts is 82 per cent negative, with seven recent price target downgrades and just three upgrades.

And to be fair, IOOF says it intends to provide much more detail on its advice "reinvention" and remediation projects at its coming full-year results.