Dissolution of AMP AWM more than just nip and tuck
ANALYSIS
AMP’s decision to fold its Australian Wealth Management (AWM) business and part company with chief executive, Scott Hartley, represents more than just a “flattening” of its management structure. It reflects just how compact the company wants to become.
To understand the significance of the dissolution of the Australian Wealth Management business it is necessary to look at what the division actually encompasses – financial advice, the North Platform and the superannuation master trust.
The dissolution of AWM as a significant division fits with the company’s central strategy of reducing its cost-base via simplification, with the likelihood that there will be more nips and tucks to come.
It is also worth considering what Hartley brought to the business when his appointment took effect in January, 2021 – he came with a curriculum vitae which included five years as chief executive of Sunsuper and a career at National Australia Bank (NAB) and MLC which saw him running both financial advice and superannuation.
With Hartley’s exit after the imposition of a new operating model for the wealth management business over the next six months, the AMP executive structure will look far more streamlined with executive managers covering advice, North and the master trust reporting upwards to the newly-empowered chief financial officer, Blair Vernon and the AMP chief executive, Alexis George.
AMP’s description of the Hartley departure and the dissolution of the Australian Wealth Management division was that it was driven by a decision which reflected “the strong work done to position the Platforms business for growth, while stabilising and delivering efficiencies within the Advice and Master Trust businesses”.
Close watchers of AMP will recognise that further tidying up of businesses operating as part of the AWM portfolio will likely occur before the end of the year.
The reality for the AWM business is that the real strength lies in the platform business, particularly North, while the financial advice business is improving its position but falling well short of break-even while its master trust business is profitable but a pale shadow of its former self, particularly with respect to corporate superannuation.
Their getting out of running Licensees would be my bet.
Doubtful. They know that their North platform, their only asset other than a small bank, relies on them having a licensee supporting it. Don’t believe the hype that IFAs are increasingly using North.
Perhaps, but many if not most practice’s that have gone self Licensed or left AMP still use the platform. That’s the IFA hype. But I guess time will tell.
They got rid of the smaller practices and the larger practices are either partially owned by AMP or looking to leave. If 1 or 2 of the larger practices leave then AMP Advice is finished. North is competing purely on price and that never wins long term.
Good assessment Scott.