Two men who will drive AMP after its merger with AXA have a vision for both the future of the financial planning industry and AMP’s role in it. Simon Hoyle reports.
When the dust settles on AMP’s takeover of AXA Asia Pacific, AMP will have near enough to 3000 financial planners on the ground across the country. That’s not quite, but almost, twice as many planners as its closest competitor.
To a greater degree than ever before, where AMP goes, so goes the financial planning industry. If AMP supports the industry’s push for professionalism, higher standards and winning back public trust and confidence, then the industry stands a better chance of achieving those aims.
But if, on the other hand, AMP has a different agenda, then the industry’s cause will be harmed, and perhaps set back irretrievably. After all, if the biggest kid on the block doesn’t want to play ball, then it’s game over – or, at least, any change that does happen will be less legitimate.
As the AMP/AXA integration team runs its ruler over the business’s combined operations, the chief executive and managing director of AMP, Craig Dunn, and the managing director of AMP Financial Services, Craig Meller, shared their vision for the financial planning industry, and AMP’s place within it.
Meller says AMP was a strong supporter of the restructuring of the Financial Planning Association of Australia (FPA) – a restructuring that ultimately received 94 per cent member support, and will largely remove the role of product manufacturing institutions from the FPA’s decision-making processes.
‘We think FoFA reforms holistically will improve the professionalism of the industry’
“We believe part of the process of improving the professionalism of the industry is for the financial planning profession to have a strong and vibrant member-based association that also has very strong commitment to improving professionalism and accreditation built around that,” he says.
“If you look at the Institute of Chartered Accountants, it works on a member basis, not in the way the FPA has done historically. So we’re fully supportive of the way the FPA is moving.”
Meller and Dunn say they also support the general thrust of the Future of Financial Advice (FoFA) proposals, with the exception of opt in.
“Our view is that when you look holistically at the reforms that are coming through within FoFA, we don’t believe that [opt in is] something that’s necessary, bearing in mind the fiduciary nature of the relationship there will be between a financial planner and their clients going forward,” Meller says.
“And it will create a significant amount of administrative bureaucracy in order to be able to manage that process on an ongoing basis.
“Therefore our recommendation to Government would be that it’s not something that we think is going to play any part in solving the issue that the Government set out to achieve, which was improving confidence in the industry and improving confidence in financial planners and, in the context of commissions, making sure there are no conflicts of interest. We don’t see it as being something that’s of any value in that.
“It just seems strange to me that we’re trying to solve a problem that isn’t there. That’s my problem with it – why are we doing it?”
There are also very clear commercial benefits for AMP in there being a professional and respected financial planning industry. Meller says high-quality financial planners present less of a brand risk.
“The brand issues are so significant,” he says.
“So the extent to which we invest in ensuring the advice is of the highest quality and appropriate is a strong investment for us, because we’re interested in protecting the value of our brand. We think that’s an element of self-regulation that is a very strong force, a positive force, in the industry.”
In the immediate future, as the merger beds down, there will be few big changes to AMP’s financial planning businesses. The integration project will take some months to work its way through – so for now it’s business as usual.
“One of the aspects of the AXA business we found most attractive was their multi-brand advice model,” Meller says.
“We think that’s going to compliment AMP’s model very well and very strongly, and we’ve been very public about saying we have no intention of changing the arrangements [for] the planners who work under the different AXA licences [and] no intention to change the terms and conditions under which they operate.”
Meller says that even though the final details of FoFA won’t be known for some time, both AXA and AMP had already moved to fee for service and had independently also worked through the likely implications of the introduction of fiduciary duty.
“So if you went to see a financial planner in AMP Financial Planning or AXA Financial Planning or Charter, they would be talking to you about a fee-for-service proposition,” he says.
Opt in aside, Meller says AMP is “very supportive of the broad thrust of the Government’s intentions” through FoFA, which he says are likely to deliver two things.
“We think the FoFA reforms holistically will improve the professionalism of the industry, and over time should therefore improve consumer confidence,” he says.
“As a minimum threshold, it’s really raised the bar. It’s going to be up to each individual licence-holder to determine exactly where they want to set their standards going forwards.”
