AMP CEO Alexis George

While the Dixons Advisory case has returned vertical integration to the front pages of the nation’s media, it’s also put the focus of policymakers on the future plans of institutions like AMP and Insignia.

For AMP chief executive Alexis George, who’s only just taking on what Conexus Financial CEO Colin Tate called “the toughest job in our industry”, addressing that future means acknowledging the past.

George appeared on the Conexus Policymakers’ view on financial services webinar Monday with incumbent financial services minister Jane Hume and the man vying for her job, Labor’s Stephen Jones, ostensibly to ask questions about their plans for advice in the lead up to the federal election.

Up to that point, however, the collapse of Dixons and the dark side of vertical integration had been a focal point of the discussion.

“The Dixon advisory debacle is an example of just about every sin in the book,” Jones said. “Conflicted advice, poor capital deployment, over capitalizing and concentration in certain products… just about every disaster combined.”

Jones was clear in his “discomfort” with business models that combine advice with proprietary products.

“I think the onus is on the industry to show that they can get over all the inherent conflicts that are implicit within a vertically integrated model,” he said, echoing the policy line taken he’s taken on insurance advice commissions.

Enter George, newly handed the reigns at an institution largely synonymous with vertically integrated practices.

“At AMP we really recognise the lessons of the last few years,” George said, adding that conflicts within vertical integration is “an important discussion”.

While not advocating for the separation of product and advice, the CEO did point to a clearer demarcation between the two as being a priority for AMP.

“If you looked at our investor day, we actually started to disclose separately the financials for advice and for our product suite,” she said. “It really is important to acknowledge they’re two businesses, and that we continue to demonstrate that transparency going forward.”

Running the gauntlet

The path forward for AMP is unclear, with the group’s share price and reputation at a low ebb after a series of scandals.

As it reshapes its internal business units, however, there is renewed hope at the institution.

The appointment of George – widely respected after steering ANZ through the timely sale of its advice network – was a coup for the beleagured board and an early win for new chair Debra Hazelton. The signings of ex-Suncorp CEO Scott Hartley and industry stalwart Matt Lawler were similarly seen as savvy moves that would give the group as good a chance as any at resetting its culture.

Like George, new managing director of advice Lawler has been willing to acknowledge the sins of AMP’s past in order to move forward.

“Today that brand is tarnished and needs to be rebuilt,” Lawler told Professional Planner in July last year. “But I always saw a place where AMP could be that national educator, could be that national voice for what advice is all about.”

Since, AMP has made positive steps for its 1,200 or so advisers. A suite of reforms has been implemented designed at taking the “handcuffs” off advisers (Lawler’s words), and the group has ended both institutional ownership of advice clients and buyer-of-last-resort agreements.

Yet the spectre of conflicts within the vertically integrated model remains for AMP.

With the Dixons case fresh in mind, both Hume and Jones agreed on the panel that product and advice should be separated. Enshrinement of this sentiment may be far off, but further scrutiny of vertical integration is likely on the cards.

For AMP, and its contemporary Insignia, how they run the gauntlet between product and advice will shape the next five years.

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