AMP NZ saw its adviser numbers drop by almost 15 per cent over 2018, the group’s latest results reveal.
According to the firm’s 2018 figures released last week, AMP NZ adviser numbers shrank from 410 as at the end of 2017 to 350 a year later. The 14.6 per cent fall in the NZ adviser force compares to just a 5.7 per cent drop for the counterpart AMP Australia business, which shed about 160 advisers over the same period to finish with 2,704 operating under the storied three-letter banner.
The NZ statistics include AMP and AdviceFirst employed advisers, those operating under the group’s qualifying financial entity (QFE) flag, and those “that subscribe to AMP’s adviser services offered under the Quality Advice Network brand”, the 2018 report says.
Last week, the embattled Australasian financial services giant put a hold on its planned float of the rump NZ wealth management business until its formal separation from AMP Life – originally slated for the third quarter of this year.
In a statement, Blair Vernon, AMP NZ chief, said: “In 2019, we are substantially focused on the separation of AMP Life and New Zealand wealth management, which will include the repatriation of significant information technology and support services designed to deliver better outcomes for customers.
“The separation will establish AMP New Zealand’s wealth management business as a standalone business unit with a mandate to accelerate business growth.”
Early in February, Vernon was confirmed as head of the NZ wealth business and interim chief of the local life and mature businesses before it moves to the control of new owner, Resolution Life.
At the same time, Megan Beer was named AMP Life chief in a role that will see her shift to Resolution Life later this year.
Vernon would “continue to lead AMP’s New Zealand wealth protection and mature operations for an interim period as they transition into the AMP Life business under Megan Beer, ahead of separation”, an AMP statement says.
While the AMP NZ business has been largely immune to the Australian Royal Commission (RC) process that landed a direct hit on the Australian operations, earnings were flat year-on-year, the latest accounts show.
Excluding the sold life and mature businesses, AMP NZ wealth management reported earnings of A$53 million in 2018, down $1 million on the previous period. However, about $6 million of the earnings would accrue to Resolution Life due to “perimeter changes” between the retained and sold AMP NZ product lines.
In January this year, AMP reported the NZ wealth business (ex life and mature) turned a net profit of A$28 million over the six months to June 30, 2018 – split between A$21 million in product fees (mainly from the almost $5 billion KiwiSaver and the $3.3 billion NZ Retirement Trust, or NZRT, corporate superannuation platform). AMP NZ manages about $3 billion of other investment products including external funds offered on its adviser platform.
During 2018 AMP NZ net cashflows fell to just A$83 million from A$220 in the previous year. The decrease in net cashflows was “primarily driven by higher KiwiSaver cash outflows”, the AMP report says.
The group also stands to lose about $1 billion of NZRT money under a pending mandate decision by the Air NZ superannuation fund trustees. It is understood a couple of parties, including Mercer and AMP, remain in the running.
Despite the decline in net product cashflows, AMP says the NZ wealth business operating earns were stable over the year “supported by income from the financial advice channel”.
Both the Australian and NZ AMP businesses face substantial regulatory challenges in the year ahead with further fallout expected from the RC across the Tasman and a milder local variant.
“As part of the regulators’ review of the New Zealand life insurance industry we expect to receive our individual report from the FMA/RBNZ soon, which we will thoroughly review to address any further actions to continue to protect the interests of our customers,” Vernon said in the release.
Last week Morningstar Australia reported AMP could see a long tail of RC-related damage “as customers desert its superannuation funds and the threat of court action mounts”.
The RC “raises several issues for AMP that are likely to keep its misconduct in the public eye, hurt fund flows and financial advisers to its business for several years, and raise the prospect of court action”, Morningstar says.
AMP’s share price closed at A$2.18 on Friday, down 3.1 per cent for the day and less than half the A$5.33 value posted 12 months previously.