AMP Wealth Management NZ has put its circa $9 billion investment portfolio up for review with a shift to passive strategies one option on the table.
An AMP spokesperson confirmed the underlying investments of both its KiwiSaver and superannuation master trust were under the spotlight.
“To ensure the investments we offer through our AMP KiwiSaver Scheme and New Zealand Retirement Trust [NZRT] continue to deliver effectively for our clients, supported by the range of other benefits AMP Wealth Management offers including access to personal help and advice, we are undertaking an investment management review,” the spokesperson said.
“The review could result in no changes or may result in a change of investment approach and/or investment manager. We will work through this process as quickly as possible, but no decisions have been made at this stage.”
Along with the entire KiwiSaver sector, AMP is facing pressure from both the regulator and competitors to lower costs across its product range. The Financial Markets Authority (FMA) is due to release its ‘value for money’ report this month that is expected to advocate for lower fees across the KiwiSaver sector.
And the imminent KiwiSaver default scheme re-tender process will also require some extreme pencil-sharpening from prospective players. AMP has the largest default exposure with some 90,000 auto-enrolled individuals among its 220,000-odd members.
The fee pressure could provoke a wider shift to index investing across the KiwiSaver sector, where passive funds already hold significant sway.
Both the approximately $5.5 billion AMP KiwiSaver and $3.4 billion NZRT invest largely via sister firm AMP Capital, although the schemes also offer a broad array of other managers including ANZ, ASB, Nikko Asset Management and Mercer.
AMP Wealth NZ is advised by Mercer on manager selection in some model portfolios, approved product list and performance reporting. However, AMP Capital ultimately determines the asset allocation of the AMP Wealth products.
But the investment review comes amid a leadership distraction that has seen AMP NZ chief, Blair Vernon, assume control of the Australian wealth business following the surprise departure of incumbent, Alex Wade, last week.
Vernon “will continue to be based in New Zealand and the interim appointment will be effective until a permanent replacement is found”, the AMP NZ spokesperson said.
Jeff Ruscoe, AMP NZ chief client officer, has stepped in as acting CEO with “no other people changes within our business”.
Wade, installed just 18 months ago by AMP chief Francesco De Ferrari to clean up the mess left by the Australian Royal Commission into financial services (RC), resigned following an “internal matter”, according to press across the Tasman.
Regardless of what provoked his resignation, Wade was facing a few challenges – now on Vernon’s plate – in the Australian wealth business. For example, a group of 100 plus current and former AMP advisers launched a class action against the company in July claiming the firm reneged on controversial buyer-of-last-resort (BOLR) agreements.
Several other RC-related class actions against AMP are already underway.
And last week the Australian Securities and Investments Commission (ASIC) also confirmed it had “more than five, less than 50, significantly less than 50” legal actions in train against AMP arising out of the RC.
By contrast, AMP NZ is a quiet backwater but other moves, aside from the investment review, are rumoured to be afoot. Despite abandoning a sales process mid-COVID it is understood potential buyers continue to circle the AMP NZ wealth business.
“We don’t comment on rumour or speculation,” the AMP NZ spokesperson said.
The ASX-listed company is due to release its June half-year results this Thursday after earlier flagging profits would be down about 50 per cent year-on-year to $150 million.
AMP’s share price closed down on Friday at about $1.40 but above its March 24 historic low of $1.11.