AMP’s recent changes to its wealth management business is around getting to a simpler business “led by client needs” and “not by selling products”, vows AMP chief executive Francesco de Ferrari.
At the Morningstar Individual Investor Conference in Sydney yesterday, Mr de Ferrari told the audience that half of the challenge behind the restructure of its wealth management business was around examining its business model, while the other half is around changing the culture.
He said it would take at least three years to “re-position the business”.
“That’s where we need to work on transforming some of the DNA – improving our execution and driving a lot of accountability in how we deliver,” Mr de Ferrari said.
AMP introduced its new advice strategy in August, which included a significant reduction in practice values which was subsequently met with anger and frustration by a significant cohort of its advisers.
Getting to the core of client needs
Mr de Ferrari said two elements are critical to AMP’s restructuring of its wealth management business.
The first element was around getting to the core of client needs.
“I find it very interesting that when I hear people talk about wealth, they normally they talk about superannuation and how they’re investing that piece of your wealth for their retirement,” he said.
“Actually, that is not the real question. It’s very hard to talk about retirement but only talk about super. Because as you see, superannuation is only 18 per cent of your money on average in Australia.
“All of a sudden you’re trying to build a company around client needs, you realise that actually just focusing on super is not going to be enough. You really have to look at what’s the overall picture and where effectively does advice help.”
Embracing ‘modular’ advice delivery
The other critical concept around AMP’s restructure, according to Mr de Ferrari, was around looking into the concept of “modular” delivery, where advice is provided only at critical life stages as well as considering whether that advice can be supported through technology.
“If we are honest about making wealth accessible to all Australians, then we have to find another way of delivering it, because face-to-face advice is very expensive. [For someone] on an average of $80,000, they will not be able to afford or shouldn’t pay a full-time adviser on a recurring basis,” he said.
“[We’ll look at] how we use technology and how we move effectively towards a more episodic advice where it’s clear to me that one size doesn’t fit all, and where we need to give clients the opportunity to buy and pay for advice when and how they need it.”