Following the sell-down of its financial advice businesses earlier this month, AMP has been pared back to three main Australian businesses and its New Zealand operations that chief executive Alexis George believes give it a solid platform for the future.
George tells Professional Planner that “there’s certainly no divestment plans” in relation to its remaining businesses, and that for the first time since she took the helm of the struggling financial services company three years ago, she believes it can credibly consider growth opportunities.
With a senior executive team including superannuation and investments group executive Melinda Howes, platforms group executive Edwina Maloney and AMP Bank group executive Sean O’Malley, and supported by chief investment officer Anna Shelley, George says the company has “all the base foundations to grow it”.
“I feel we’re in a different position today,” she says. George celebrated her three-year anniversary with AMP this month, a tenure which has seen her tasked with turning around the embattled wealth giant that was at its lowest point in its 175 year history when she was appointed.
“If you’d asked me that question three years ago, I couldn’t have even said we can be opportunistic. At least now, if opportunities present themselves, we’ll have a really good look at them.”
George says having sold down its advice interests, AMP will concentrate on building up its intrafund advice capabilities to serve members of its super funds, and will closely monitor the development of the Albanese government’s Delivering Better Financial Outcomes legislation to see how a new type of so-called “qualified advisers” can potentially be used.
“We will broaden out our intra fund [offer], but it’ll be done in a digital way, and done when the [DBFO] requirements come through, but we’re not going to be sitting there doing comprehensive advice across a plethora of products and options,” George says.
“Clearly, if the legislation around simplifying some of the advice requirements came through, we would think about expanding that offering. I don’t ever see a world where we would be competing with a fully-fledged financial adviser giving comprehensive advice, but I do think we could help more people who just wouldn’t go to an adviser, for whatever reason.”
George says all super funds are hamstrung by an inability to “even say basic things to the to customers today”.
Natural home for retirement
George says her ambition is for AMP to become “the natural place for Australians to come to, to ask the questions they’re too scared to ask about retirement, because I’ll feel like it’s a stupid question, to know that they will get the best form of advice”.
“That could be little ‘a’ advice or big ‘A’ advice about what they need to do to have a dignified retirement, from a financial perspective, from a social perspective and from a housing perspective,” she says.
“Do I know exactly what the services will be? No. I know there’ll be a form of advice, referred or intrafund. I know there’ll be solutions like platforms. I know we want to help people own a home, and I know there’s a social aspect to it. So that, for me, is what I want us to be. I want us to be the place people come to, to plan for a dignified retirement.”
George says while AMP’s business mix has already changed significantly, she is “100 per cent sure there will be other changes” to come as the financial services and wealth markets continue to evolve.
“Can I tell you exactly what they’ll be today? No, because it’s what I said: if we don’t adapt to the new world, then we won’t thrive in the new world,” she says.
“We’ll continue to build out adjacent services, as we’ve done with [social media platform] Citro, as we’re doing with the bank. We’ll continue to build those out. But if you’re asking me, our wealth businesses are strategic; they are the heart of the company.”
But George and the senior AMP leadership still need to convince a sceptical market that the business is shrinking to greatness, rather than to oblivion.
Journey back in time
AMP is now almost unrecognisable from the company that listed on the ASX in mid-1998, following a contentious demutualisation. Then, its principal businesses were life insurance, asset management and financial advice.
Two of the three are now gone altogether, and it retains only a minority stake in a new company set up to hold three advice licensees and a licensee services business.
In part, the transformation of the business reflects the changing nature of the markets it operates in; in part it represents a litany of management missteps and misconduct, as the Hayne royal commission exposed publicly and painfully.
Its share price jumped on news of the advice sell-down but even at its level at the time of writing of around $1.30, it remains at a fraction of the $12 to $14 heights it scaled in 1998, immediately after listing.
In May that year the Reserve Bank of Australia said in a semi-annual statement of monetary policy that AMP’s capitalisation on listing was expected to be between $13.5 and $17.5 billion. Its current market capitalisation of $3.4 billion is an unavoidable reminder of the value destroyed over the past quarter of a century.
George does not shy away from the errors and sins of the past.
“We’re 175 years old this year, and when we were sitting around the executive table, reflecting on that and reflecting on the changes over the last 175 years,” she says.
“You think, look, there’s been some good years – more good years than bad years – but there’s certainly been some troubled times. I think we have to respect the history and we have to cherish the history. But, you know, the world changed.
“We’re seeing many old companies that haven’t adapted to the new environment that don’t exist anymore. And I don’t like that for our company.”
