AMP CEO Francesco De Ferrari (source: twitter)

CEO Francesco de Ferrari focussed on the positives after US investment giant Ares Management pulled its conditional $6.4 billion offer for AMP, highlighting ongoing discussions about the sale of AMP Capital and the “optimal outcome” of its wealth management and banking review.

Speaking to media on AMP’s FY20 results call, de Ferrari said the portfolio review AMP did on the business while Ares conducted its due diligence revealed the company’s advice “reshaping” program had been the best course of action.

“Based on discussions and where we landed we effectively decided that for our Australian wealth management business, our strategy is the best outcome for shareholders,” de Ferrari said.

The group is on schedule for the its three-year transformation strategy aimed at shedding less profitable advisers and consolidating smaller practices; after 19 months De Ferrari said the program is “75 per cent” complete.

The CEO said the review process did result in an “element of distraction” for the business that was expected. “We can’t negate that,” he added.

AMP shares opened at 9 per cent down after this morning’s announcement that Ares had pulled out of its initial offer, remaining at the $1.40 mark close to the end of trading.

The company’s banking and wealth arms have been removed from further discussions with Ares; the investment manager remains interested in purchasing AMP Capital in a standalone deal, AMP said.

Easy headlines

AMP’s advice cohort has more than halved in the last few years and its flagship licensee, AMP Financial Planning, has now been surpassed as the largest in the country.

Asked how much of this decline is by design, de Ferrari said he was grateful for the opportunity to defend the trend. “These can be very easy headlines,” he said.

“We’re definitely looking to have advice businesses that are sustainable and profitable,” De Ferrari continued. “We are really tracking the average AUM per practice and how that is moving.”

The bulk of AMP’s adviser exodus has gone according to plan, he explained.

“Almost a year ago we gave advisers that were not meeting the criteria or not sustainable the option to sell us back their business or merge with a larger practice,” de Ferrari said. “Almost all of the attrition from our program has been a deliberate effort.”

The adviser exodus, the pandemic and the government’s early release of superannuation scheme all contributed to total assets under management for advice and super falling by $8.3 billion (8 per cent) for the year.