World-class financial institutions?
AMP is currently revamping its financial advice business.
As part of its long-term growth plans, CEO Craig Mellor stated that he intends to make his company more customer-oriented.
AMP recently established an alliance with United Capital, a large American financial group, touted as a leader in something called the ‘financial life management movement’. This alliance seeks to leverage the experience and information that the Californian-based group has gleaned from their implementation of a goals-based advice approach throughout America.
This does not sound quite right.
I predict that in under three years’ time, AMP is going to consider this alliance wasted money and effort.
Because I believe AMP continues to misunderstand what business it is in.
OK, AMP is Australia’s largest financial advice network. This approach, however, is not what Australians or AMP advisers need most. There is a clearer, and more productive way to make the company more customer-oriented.
Separate AMP products from AMP financial advice.
AMP's core strength is their products.
AMP’s history of clients, depth of product knowledge, and understanding of the Australian marketplace is a testament to this strengths. AMP have smart people, robust product support, and well-developed product research and development.
What would this separation mean?
- AMP can focus on their core strength – delivering world-class financial products.
- AMP’s market for their products can broaden well beyond their current aligned advisers.
- AMP’s entrepreneurial advisers become free from conflicting arrangements such as buyer of last resort (BOLRs - the most hidden sort of conflicted alignment), platform fees, investment trail fees, and insurance and banking product commission payments.
- Provides those advisers who wish to remain ‘aligned’ with clearer positioning as AMP Professionals delivering great products from a great manufacturer.
AMP - The next creative disruptor?
The effect would be a flood of entrepreneurial advisers freed from the product-based structures that will always prevent them from providing impartial, valuable and professional financial advice.
Importantly it will also provide needed brand clarity for AMP’s many stakeholders – AMP builds world-class financial products for everyone.
Unfortunately, I don’t think they will do it.
AMP has worked so hard for so long to build Australia’s largest adviser base. I’m guessing they would not consider it prudent to potentially set free the top 20 per cent of advisers to grow their own brands, value and their reputations.
I spent ten years forging alliances with Amercian firms. Everyone can learn something from best practices from all over the world, but my experience suggests that Australia’s financial advice profession is unique and world-class.
Our market needs world-class leadership.
Good luck AMP.