AMP remains in the advice game in NZ despite engineering an exit strategy from its long-held and troublesome Australian financial advisory networks last week.
In an historic deal inked with a recently formed Australian financial planning conglomerate, Entireti, and AZ Next Generation Advisory (AZ NGA), AMP will offload its multiple advice businesses for a combined A$92.4 million, booking a loss of A$30 million after “separation and transition costs”.
Under the arrangement, AMP will retain a 30 per cent stake in a new entity that will house the Charter, Hillross, AMP Financial Planning and self-licensee Jigsaw brands: Entireti – formed this May as a merger between iconic Australian advice firm, Fortnum, and Personal Financial Services (PFS) – will own 70 per cent of the company.
The sale will net AMP A$10.2 million including its 30 per cent share in the newly formed entity.
At the same time, AZ NGA, backed by the Italian Azimut group, will buy out AMP minority holdings in 16 advice practices for A$82.2 million: AZ NGA has a “long standing alliance” with Entireti (or its antecedents), according to a release.
Entireti will pick up about 955 advisers from the AMP brands to create a combined financial advisory network of more than 1,300 – becoming the largest advice business in Australia, a crown once worn by AMP.
Alexis George, AMP chief, said in the statement: “Advisers will benefit from the combined scale of these businesses, delivering new services and technology, with capital backing,” George said. “We are committed to supporting advisers through this transition and enabling them to enhance their value proposition to clients.”
She told Australian media last week that AMP’s effective retreat from offering financial advice shows “vertical integration is gone”.
Vertical integration, however, remains in place in the AMP NZ business, which reported 68 financial advisers employed under its in-house and AdviceFirst banners.
In half-yearly report documents released last week, AMP says the NZ business “maintained performance and continued to diversify revenue” during the first six months of 2024.
Accounts show the NZ business – comprising the advisory arm, KiwiSaver, investment and employer superannuation units – delivered net profits of A$17 million in each of the three half-year periods to the end of June this year.
Wealth management (KiwiSaver etc) represented A$10 million of the latest half-year NZ net profits while advice chipped in A$7 million.
Over the second half of the year, the AMP NZ business aims to hold performance steady, ramp up “retention initiatives” such as its new term deposit venture (with Heartland), build on “financial education opportunities” and extend the “Enable.me offer”.
AMP bought the financial coaching/advice business Enable.me last year for $22 million, merging the firm with AdviceFirst.
During the 2023 calendar year the AMP NZ business reported total revenue of $172 million including $99 million via the KiwiSaver, superannuation and investment products – now mostly managed by BlackRock in index strategies.
The $6 billion or so AMP KiwiSaver brought in $45.4 million in fees last year while the $3.4 billion NZ Retirement Trust employer super master trust earned $29.8 million of fee revenue last year: AMP reported asset management expenses of almost $14.7 million for the 12-month period.
In the June 2024 half-year report, AMP says the economic backdrop in NZ “remains challenging”.
“KiwiSaver… delivered positive net cashflow, though this was impacted by member outflows and slower new member growth,” the report says. “Net cash outflows of [A]$27 million (1H 23: [A]$2 million net cash inflows) were impacted by legacy products in run off and weakness in the local platform business.”
NZ accounted for about 10 per cent of AMP group profits for the first half of this year with only the in-transition Australian advice arm reporting a loss (-A$15 million) over the six months: in 2023 the Australian advisory arm lost A$47 million – the latest in a long line of red ink years.
Since 2020 the ASX-listed financial services group has sold down its life insurance and asset management (AMP Capital) businesses after poor performance, public scandals and regulatory actions,
With the once-dominant advice network (mostly) out of the way, AMP is now reduced to a small bank, an investment platform operator and a A$54 billion Australian superannuation provider.
“We have made good progress this half on our key strategic commitments, and we have positive momentum heading into the second half of the year,” George said in the release. “We have continued to deliver on simplification and cost reduction, while also driving growth in our wealth businesses and returning capital to shareholders.”
The group is en route to returning A$1.1 billion to shareholders post the staggered sale of AMP Capital starting in 2021.
AMP share price jumped about 17 per cent on the results last week to close at A$1.29, up from the low of A$0.84 plumbed last November.