On her ninth day in what is arguably the toughest executive role in Australian financial services, new CEO Alexis George was upbeat yet realistic about the reinvention of AMP’s wealth management business and its broader cultural reset
“We’re not starting from zero here,” the CEO said at the start of the group’s 1H21 results call. “There’s been a lot of work done to reset AMP’s culture.”
A large part of the company’s reset hinges on how the group turns around its once-storied advice arm. While CFO James Georgeson said AMP’s ongoing advice reinvention project was “95 per cent complete”, the new CEO acknowledged there was still a long way to go.
“The reshape of advice and simplification of our approach both have momentum, although it’s early days and the team remains focussed on delivering further benefits,” George said.
The 1H21 results for AMP Advice reflect the group’s efforts to fight reduced revenue with cost minimisation; net profit for advice came in a $48 million for the period (down 17 per cent) as fee reductions across its advice services and the loss of grandfathered commissions were offset by the “cost improvements” across the network.
According to Georgeson, the “scalable, profitable and more compliant” path for AMP Advice will mean comparable losses in the short term.
“As we continue to transform the wealth management business the second half profit to wealth management is expected to be at a similar level to the first half as the ongoing margin compression is offset by efficiency savings within the business,” he said.
The advice and superannuation businesses experienced a $2.7 billion fund outflow for the period.
Short-term pain for AMP Advice is an expected part of the group’s transformation, especially given that it’s only two years into the three-year plan recovery laid out post-royal commission by George’s predecessor, Francesco de Ferrari.
The new leaders of advice at AMP – AMP Australia CEO Scott Hartley and head of advice Matt Lawler – have already cleaned the slate for George by announcing an end to AMP’s institutional ownership of client books and the phase out of BOLR agreements.
With the advice platform set, George says her priority – other than the impending demerger of AMP Capital’s private markets business – is fixing the company’s culture.
“Culture is top of mind for our people and top of mind for me,” she said. “I really need to lay down what I think this company is going to look like in the future.”
Overall, the group pulled out what George characterised as a “respectable” financial performance for the half. A $146 million profit line for the period comes in at 28 per cent below the same period last year, while overall revenue fell 5 per cent to $1.7 billion.
The company’s failed negotiation to sell AMP Capital to US-backed Ares Management, followed by news of the intended demerger, continue to result in outflows for the investment arm with $6.7 billion pulled out by clients in the period.
This news was marginally offset by strong performance across AMP’s banking division, which grew its loan book to $21 million, and its North investment platform, which experienced a 10 per cent increase in assets under management to $57 billion.
“We want North to be the platform of choice for financial advisers,” George said.