Beleaguered Australian financial services giant AMP has announced a new three-year strategy that will include steep cuts to its large adviser network as it reports a A$2.3bn loss for the first half.
AMP is raising A$650m in fresh equity, resurrecting the sale of its life insurance business and implementing a cost cutting programme, as part of a multibillion-dollar strategic reset aimed at salvaging the scandal-plagued financial services group.
The transformation will be underpinned by a major tech revamp that includes a restart for the previously paused new core banking system, "digitally enabled" wealth management products that are almost certain to incorporate robotic advice, costed at A$350m to A$450m "investing in growth" fund pool.
This industry and profession is undoubtedly going through significant and radical disruption and transformation. We will stand behind advisers and support them through this complex transformation"
AMP positioned the reinvention as "helping client realise their ambitions" and said it would include shifting focus to direct-to-client channels and digital solutions.
However, for advisers this likely means job cuts as the bank reshapes aligned advice by using "fewer, more productive advisers." Chief executive Francesco De Ferrari said the adviser network of AMP was over 2400 and they were critical to getting AMP to where they were today.
"This industry and profession is undoubtedly going through significant and radical disruption and transformation. We will stand behind advisers and support them through this complex transformation," he said.
"We are not going to talk about numbers of advisers, it's not going to be the number that counts. It's the quality and professionalism that's going to be critical," he said.
De Ferrari said that AMP would work with its advisers to make sure the transition to this new strategy was done in a supportive way.
The Australian wealth manager announced the shake-up as it reported a net loss of A$2.3bn for first the six months of 2019, due mainly to A$2.35bn impairment charges linked to a write down in value of its insurance and wealth management businesses. In the same period last year AMP made a A$115m profit. AMP said it is on track to pay back A$778m through customer remediation programmes in relation to misconduct highlighted by a recent public inquiry into Australia's financial sector.