AMP’s advice business more cost-effective outside AMP

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.