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AMP’s advice business more cost-effective outside AMP

Mike Taylor13 May 2024
Broken chain

There are significant cost benefits for the AMP advice business if it sits outside of AMP, according to AMP managing director, Advice, Matt Lawler.

Delivering a keynote presentation at the Financial Newswire Advice, Wealth and Super Rewired Conference, Lawler was blunt about the options which were open to the company.

“We are looking at options in terms of the future. One thing about getting to break-even is that it could be inside AMP or outside AMP,” he said.

In doing so, he pointed to the cost-savings which came with sitting outside a major company.

“There is a cost to being inside a company like AMP. It has an APRA-regulated fund, it has a bank and a super fund so therefore all those regulator requirements apply to an advice business like us whereas no other advice business will have that applied to them. And it is a significant cost,” Lawler said.

“There are also other costs associated with being inside a big institution like AMP and anyone who has worked inside a big institution will know this concept of shared allocations or group allocations are the bane of everyone’s life.”

“They are large [costs] in a group like that where we are neither users of the services nor want the services but you get allocated the services,” he said. So that’s why we think a future outside of AMP might be the right one with AMP still involved but potentially outside AMP with other investors coming into the business as well.”

“And I think with other investors our focus would be equity partners – people who want to invest in the underlying practices,” Lawler said noting that other conference participants had previously discussed the approach adopted by AZ-NGA.

“We’ve got lots and lots of demand for people to grow that want someone to come and partner by taking equity in their businesses so if we can line those up that makes a lot of sense as well,” he said.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Anon
16 days ago

Sounds like he is laying the groundwork for AMP to ditch licensed advisers altogether, and switch to Jones’ unqualified sales reps as their primary “advice” channel.

one foot out the doora
15 days ago
Reply to  Anon

AMP have talked about getting out of License business for some time to those equity practices in their network. Their plan is to have equity in the business that matter and cast influence at board level (Read between the lines keep supporting My North) My tip is private equity is at play in the AMP space stay tuned.

Chrisso
15 days ago

Exactly what Insignia is doing.

Tim
15 days ago

I think AMP will spin out their AFSLs into a separate company and have an equity stake in that company (probably open equity to existing advisers/firms in the network). Their main play is having equity in the advice firms themselves…much higher profitability with lower risk.