Developments in the controversial AMP wealth restructure continue apace, with advisers who have been cut from the company’s future plans being told they have till Halloween to accept a “one-off offer” to leave or face less attractive options in the future. The timing for the deadline of the offer – Halloween, which mirrors the current Brexit deadline to leave the EU, leaves affected advisers just over a month to weigh up their professional future.
Following a strategic review of its business and direction, earlier this month hundreds of AMP aligned advisers were been notified by AMP Financial Planning (AMPFP) that their practices were “not strong enough” to meet new regulations imposed by the government to abolish commissions and increase compliance, and as such, AMP planned to cancel their authorisations.
AMP’s CEO of Australian Wealth Management Alex Wade said of the review:
“We have identified some practices that won’t make it through this transition because their business economics simply aren’t strong enough. The impact of these changes is some less sustainable practices will no longer be licensed by AMP in the future.”
The termination letter stated “AMP Financial Planning (AMPFP) has made the difficult decision to terminate your corporate and individual authorised representative status. AMPFP has made this decision because your practise does not meet the thresholds that we have set under AMP’s future strategy.”
The Money Or The Box?
In a sign that AMP wants a swift resolution to the issue, the one-off offer allows for a prompt exit (estimated to take 5-6 months), promises a one-off “light” audit and permits the adviser to continue to work in the financial advice industry.
The latest notification to advisers’ states that effected advisers have 4 options, take the current “one-off” deal, find another licensee, sell or merge their business or go through the amended buyer-of-last-resort (BOLR) scheme.
Not all advisers who are to be terminated are receiving the one-off offer and some are being coerced into the alternative offers including expanding their practice by merging with or acquiring another practice, according to an anonymous source in the Fin Review.
Concessions or Carrots for Deal Making?
In a concession to the criticism that AMP encouraged some advisers to borrow to purchase practices with BOLR terms at 4x business valuations, AMP acknowledged that in some circumstances, debts outweigh practice values. Addressing this point AMP said “Practice finance debt will be taken into consideration in understanding your situation including what support may be provided where practice finance debt is higher than the client register value at the completion date. This is at the discretion of AMPFP.”
AMP also said advisers who elect to find work under another licensee will be able to apply for the release of clients from AMPFP’s institutional ownership arrangement and allow them to be transferred to the new business.
It would seem that both of these concessions seem to place the final assessment with AMP and advisers would hope that AMP’s intentions with these offers would be a sincere attempt to facilitate a workable cessation between the two parties with as much mutual benefit as possible.
AMP has maintained that the circumstances of each practice would be considered individually going forward.