It was August 2021 when Alexis George took the reins as AMP chief executive, and it was July 2021 when Matt Lawler joined the business to lead its financial advice operations.

In the past two calendar years on George and Lawler’s watch AMP has lost $115 million in advice, including the $47 million in 2023 reported yesterday. While that’s a 30 per cent improvement year-on-year, they need to convince the market their plan and strategy will get AMP’s advice operations to at least breakeven and re-establish AMP as a licensee of choice for more advisers.

They have some runs on the board. Losses are indeed declining, and during the year in question AMP was able to reach a settlement to put its Buyer of Last Resort woes behind it. The significance of that, financially and symbolically, shouldn’t be underestimated.

Even so, AMP’s strategic options for its advice businesses are limited for as long as it remains significantly loss-making. Even another 30 per cent improvement in 2024 would mean it’s still losing north of $30 million a year, which would that severely restrict the pool of potential suitors.

“We have to make this business sustainable,” George tells Professional Planner.

“I know some of our competitors have taken different approaches by spinning out loss-making [licensees], but our view is we need to make sure we got the right technology, it’s sustainable, and then we can talk with our advice partners about various options that may be available.”

Advice remains an attractive business for AMP, George says. It has an advice practice within the organisation that delivers intrafund advice to superannuation fund members, which George says will remain “incredibly important” provided the government’s response to the Quality of Advice Review does ultimately open the door for simpler advice to be delivered to more people.

Whatever path AMP takes with its advice businesses in future – whether it retains full ownership, seeks outside partners, spins them out into another entity, or settles on any other strategy – George stresses it will be done in collaboration and co-operation with its advisers.

“When it comes to full financial advice, or our licensee business, I think we’ve just got to keep looking at the opportunities that are available. But I want to stress we’re not doing anything to the advisers. You’re working with them to try and figure out what’s best for them, what’s best for us.”

“We’ve spent a lot of time regaining the respect and – [group executive for advice] Matt Lawler in particular – has spent a lot of time regaining the respect of our advice network and I ain’t gonna destroy it with some stupid decision that doesn’t involve them.”

When a business is producing significant and ongoing losses there’s a couple of paths out: lift revenue, cut costs, or do a bit of both.

Right now, the main revenue-growing levers that licensees can pull are to authorise more advisers and charge them fees; develop new services that advisers will pay for; and raise the price of existing services. Typically, they employ a combination of the three.

AMP was yesterday heralding the improved satisfaction of its advisers with it as a licensee, and the fact that AMP-aligned advice practices typically generate more revenue than the industry average.

Both these things are potential drawcards for new adviser and new practices joining the network. George noted yesterday that in 2023 “we’ve actually started bringing on new practices for the first time” in a long time.