AMP has criticised the regulatory environment for contributing to its unprofitable advice business and instead aims to use its North platform as an outreach to all advice businesses.
In her address at AMP’s AGM, chief executive Alexis George stated its advice business has been running at a substantial loss in recent years and projected to do so again in 2022.
“When it comes to our advice business, we know how important providing financial advice for Australians is and we remain committed to improving access. However, the current regulatory settings mean it is very difficult for a licensee to be sustainable and profitable.”
Last year Advice CEO Matt Lawler wrote “the pendulum has swung too far” and the industry was becoming over-regulated.
AMP announced one-off losses during its FY21 results in February where it stated its expectation to triple external financial adviser inflows over the next three years and expects the advice business will break even by FY24.
“Our business performance for 2021 reflects that we are a business in transition,” George stated in her Friday address. “While we recorded a statutory net loss of $252 million, the underlying business showed a solid performance with a net profit after tax of $356 million – up 53 per cent on the previous year.”
The firm stated $200 million in earnings across the superannuation and platforms businesses was offset by the losses in the advice business. Australian Wealth Management profit was down 25 per cent to $48 million.
“A big focus will be on continuing to drive platforms revenue and making our advice business much more efficient. A number of savings in advice have already been achieved which will flow through in this year’s results.”
The struggle to make advice profitable is an obstacle in the firm’s goal to have a clear division between product and advice which Lawler described as each part needing to be “excellent” at what it does.
AMP highlighted the North platform as a “strong area of potential” for business which could support its aligned advisers as well as independent advice practices.
The goal is to make North the preferred platform for all financial advisers.
“While we have a network of aligned advisers, who know our systems well and use North, if we are to grow, we also need to engage independent financial advisers.” George stated. “We’re doing this by constantly improving the capability of the platform, expanding the investment options available and ensuring we have the right relationship management in place.”
BT disassociated itself from delivering advice instead focusing on its Panorama platform while CFS relies on over 8,000 advisers using its FirstChoice and FirstWrap platforms.