AMP NZ has seen adviser numbers jump by almost 40 per cent following its acquisition of ‘financial coaching’ outfit Enableme earlier this year, according to figures released with the parent group’s half-year report last week.
The Enableme buyout added some 20 employed advisers to the AMP NZ fleet, which rose from 52 at the end of June 2022 to 72 at the latest count. Enableme almost doubled the size of the AMP-owned AdviceFirst network, which now houses 50 advisers: a further 20-odd advisers operate under the AMP home-brand.
An AMP statement says the Enableme “fee-based coaching programs” along with the sale of a legacy superannuation business (to Lifetime Income in January) has helped the NZ wealth management business diversify away from its traditional asset-linked revenue model.
Nonetheless, assets under management continue to fuel the majority of AMP NZ income, which remained flat for the six-month period year-on-year at A$64 million. Net profit after tax also held steady at A$17 million – split between A$11 million for wealth management and A$6 million attributed to advice – during the first six months of 2023 compared to the same period last year.
The now A$5.5 billion AMP KiwiSaver scheme anchors the NZ group, which reported total funds under management (FUM) of almost $10.8 billion at the end of June with the roughly A$3 billion employer superannuation master trust and A$2 billion plus other retail money making up the difference.
While the AMP KiwiSaver scheme reported net cashflows of A$74 million over the six months, net outflows of A$141 million from other funds dragged the flow gauge into the red: positive investment returns, however, lifted overall FUM. AMP NZ, which uses BlackRock as underlying manager for most investments, has levied a net profit after tax of about 0.3 per cent on FUM over the last couple of years, the accounts show.
AMP Australia also reported steady, or slightly improving, results for most of its divisions despite the troubled advice network still bleeding cash – losing A$25 million net for the half-year on gross revenue of A$25 million. The AMP adviser population fell more than 11 per cent year-on-year to reach 1,010 at June 30 (1,143 at the same time in 2022).
According to an AMP release, the Australian advice chain has pared losses somewhat over the previous 12 months with a “focus on costs and scaling of practices to deliver efficiencies”.
However, the group has set aside A$50 million to cover potential payments to former AMP advisers following a class action Australian court defeat last month over a unilateral buyer-of-last-resort (BOLR) valuation downgrade in 2019. The court ruling could see AMP on the hook for A$100 million or more to backfill BOLR pay-outs to 120 or more advice firms based on industry estimates.
AMP paused phase three of its capital return process pending the outcome of the BOLR case.
After offloading a raft of assets over the last couple of years including the life insurance and asset management (AMP Capital) units, the ASX-listed firm has handed back A$610 million to shareholders with a further A$140 million to land through a dividend and buy-back combo by the end of October.
The group also paid down A$302 million of debt in July while newly installed chief financial officer, Blair Vernon, has pencilled-in a cost-base reduction of about A$120 million over the next two years – albeit with an upfront hit of up to A$150 million.
In addition to the ship-tightening managed by Vernon, Alexis George, AMP chief, told investors the business would continue to review its remaining “portfolio of assets to ensure AMP is the right owner”.
“Reducing costs and improving efficiency remain a key focus for the organisation. Our [full-year 2023] costs are on target to be in line with [full-year 2022], and it’s important to note that to achieve this we will absorb ~$50 million of additional costs due to inflation and stranded costs related to our sold businesses,” George said.
“Today we have laid out a path for further simplification of AMP.”
The AMP share price jumped almost 4 per cent post the half-year results release.