The for-sale AMP NZ financial services group has turned in another poor quarter as total funds under management (FUM) slumped by $200 million.
According to AMP quarterly product cashflow results released last week, the NZ financial services division FUM fell from just over $12.8 billion as at the end of June to $12.6 billion three months later in local currency terms.
AMP’s KiwiSaver scheme grew by just $6.5 million over the September quarter on net inflows of $46.2 million and a combined negative effect of ‘other’ movements (including fees, taxes, investment returns and foreign exchange) that cut FUM by over $39.7 million.
During the same period, the AMP NZ superannuation and other retail FUM sustained a net reduction of $200 million plus with both sectors seeing net outflows (of about $28 million and $103 million, respectively) and ‘other’ movements of -$75 million.
In a statement, AMP said the September quarter fall in NZ wealth management FUM was “mainly due to a weaker New Zealand dollar”.
For the same quarter in 2018, the AMP NZ financial services business booked net inflows of about $100 million across its KiwiSaver, superannuation and retail products.
AMP formally started the sales process for its NZ wealth management business in August, sparking interest from a number of as-yet anonymous shoppers. Kiwi Wealth has knocked back media reports last month citing it as a lead contender for AMP.
An AMP spokesperson said: “Jarden has been appointed to assist us as we work through the divestment process.
“Our core focus remains on our business as usual operations and serving our local clients.”
Meanwhile, the AMP Australian wealth arm eked out net FUM growth over the quarter of about A$480 million across its complex web of superannuation, retail and investment platform products.
AMP chief executive, Francesco De Ferrari, said in a release: “Australian wealth management is taking significant steps to reinvent its business model, building a business around client needs. We have achieved stronger inflows during Q3, reflecting our improved fee competitiveness, but also higher outflows as the new Protecting Your Super legislation was implemented in Australia.”
The Australian wealth business has also embarked on a swingeing campaign to reduce its aligned financial planner forces in a move that could see adviser numbers halved from a peak this year of about 2,400.
As part of the adviser cull, AMP unilaterally reconfigured the controversial buyer-of-last-resort (BOLR) agreements, significantly reducing business payout terms for hundreds of the group’s advisers. The AMP financial planner association subsequently engaged law firm, Corrs, to explore a class action against the embattled financial services giant.
Earlier in October, AMP revealed plans to merge its wealth management and bank divisions, appointing current wealth chief, Alex Wade, to head the unified business under the new brand of ‘AMP Australia’.
In a move that will affect many Australian financial planning business, the Liberal-led government passed a law this month that will see so-called ‘grandfathered commissions’ banned from January 1, 2021. While Australia outlawed commissions on new investments under the 2012 Future of Financial Advice legislation, existing product-linked ongoing adviser payments remained in place: the new law ends those contractual arrangements.
Jack Regan, former AMP head of advice and NZ, told the Australian Royal Commission in 2018 that grandfathered commissions represented about 70 per cent of the group’s advisory income.
Meanwhile, AMP Capital managed to grow total FUM by almost A$2.5 billion over the September quarter despite net outflows of A$1.1 billion, according to the data released last week. Interestingly, the A$200 billion plus fund manager reported net inflows of A$766 million from external clients while related party investors withdrew a net A$1.87 billion from AMP Capital over the September quarter.
“AMP Capital continues to experience strong demand for its real assets investment capabilities, with especially strong infrastructure debt flows and commitments of US$6.2 billion received for its fourth infrastructure debt strategy,” De Ferrari said.