Hundreds of AMP financial advisers are getting termination letters giving them five possible ways to leave the group, including do nothing and see their authorisation and contractual agreements terminated within 180 days, according to reports.
Beleaguered Australian financial services giant AMP announced earlier this month a new three-year strategy that included steep cuts to its large adviser network as it reported a A$2.3bn loss for the first half.
In recent weeks, AMP advisers received a letter from Brian George, managing director of AMP Financial Planning, giving them different ways to leave the group, Australian specialised news outlet ifa reported.
AMP has made the difficult decision to terminate your corporate and individual authorised representative status"
One of those options is to do nothing and within 180 days see their authorisation and contractual agreements terminated.
Another option is for AMP advisers to exercise their BOLR rights and sell their business back to AMP for 37.5% less than they were initially promised. The BOLR changes have created controversy in the industry.
AMP Financial Planners Association chief executive Neil Macdonald said the group would vigorously contest these changes to the terms of the BOLR. "AMP was contractually obliged to consult with the group over changes to the terms, and also to give its members 13 months notice of any changes that would have a detrimental effect on them," he said. "AMP has done neither."
"Advisers had to pay four times recurring revenue to buy into the right to service an AMP client book. That was the price set by AMP. It was never a market value."
Advisers also have the option of taking a "one-off offer" buy-back arrangement that replaces all rights practices have to a BOLR payment under the policy.
Advisers have also been given the option of securing appointment as an authorised representative of another Australian Financial Services (AFS) Licensee and apply to AMPFP for the release of client institutional ownership terms.
Finally, they can join or merge with another AMP practice or sell their client register rights to another AMP practice.
In the letter, AMP explains that the financial advice industry is experiencing "significant disruption", ifa reports.
"Increasing regulatory scrutiny, rising education and professional standards continue to place unprecedented pressure on advice businesses," the letter states.
"As part of a review of AMP's strategy in the advice business, AMP has undertaken a review of its advice practices across the AMP financial planning network. Unfortunately, AMP has determined that your practice does not align to this strategy.
"As a result, AMP Financial Planning Pty Limited (AMPFP) has made the difficult decision to terminate your corporate and individual authorised representative status. AMPFP has made this decision because your practice does not meet the thresholds that we have set under AMP's future strategy."
AMP had 2567 core licensed advisers as of December 31, when it last reported numbers. The advisers included 223 in AMP Advice, 1334 in AMP Financial Planning, 687 as part of Charter Financial Planning and 313 at Hillross.
The network could be reduced to around 1600, AMP chief executive Francesco De Ferrari has warned.