AMP CEO Craig Meller has just announced that the financial provider has cemented its position as holding the largest financial advice network in Australia and New Zealand.
Meller made the comment as part of his speech post-AMP’s first quarter update, which looked at cash flows, assets under management (AUM), and wealth protection.
“We also grew our financial adviser franchise in 2013, cementing our position as the largest advice network in Australia and New Zealand, with around 4,400 advisers,” Meller said.
He spoke of other positive results, including completing the integration with AXA, and continuing to expand investment management businesses in Japan and China.
2013 had been the best year for net cash flows since before the GFC, with $2.2 billion in the Australian wealth management business and record results for AMP Bank.
The trends continued in the first quarter of this year, he said. AMP wealth management net cash flows were $363 million, a 72% increase from the same quarter in 2013. The total AUM was $101.1 billion, up from $100.5 billion at the end of the fourth quarter in 2013.
However, it wasn’t all good news.
The achievements were offset by significant challenges in the life insurance business, where higher than expected claims and policy lapses significantly reduced profits.
“These are problems that everyone in the industry is grappling with,” Meller said. “It is happening because people are changing the way they think about and use personal insurance, like life insurance and income protection.”
People are shopping around more than before and changing policies more frequently, he said. These are never-seen before changes that could be a permanent fixture.
“This is why we believe the existing business model for personal insurance in Australia needs to change…we are putting huge efforts into resolving these issues and developing new products that work more naturally with how people think and behave.”
As a result, AMP will undertake a comprehensive program to transform the core Australian business.
Among other things, this will include a complete re-design of the advice business so that more clients will have access to financial advice.
AMP will also invest $320 million over the next two years in an effort to take $200 million off the base by 2016.
“This will allow us to meet our customers’ expectations about value for money, while also reinvesting in new customer solutions and delivering better returns to shareholder,” Meller said.