After 21 years building up Pitcher Partners’ wealth management division into a $3.6 billion powerhouse, the high-profile adviser will break from the firm to create an advice group focussed on servicing HNW clients and their families.
An advice group can either shift its compliance settings to accommodate the reforms, or they can reshape their business strategy to take advantage of them. The different paths could lead to a bifurcated industry when all’s said and done.
AMP doing its best to preserve the worst of its reputation
News that AMP will cut into entitlements for its longest serving staff will reawaken a perception that there are deep cultural issues at the 175-year old firm, with it once again accused of betraying the people who put the most faith in it.
Just as AMP is starting to distance itself from the Buyer-of-Last-Resort disaster that saw it pay a $100 million settlement to ex-advisers who had their pre-existing sale agreements pulled when the advice market fell, it has now decided to re-jig the employment terms of its longest serving workers.
As reported by Investor Strategy News on Friday, AMP will reduce redundancy pay maximums and notice periods across its business.
Under the new policy, the minimum notice period has changed from eight weeks to six; the age supplement for staff over the age of 45 has been cut from a maximum 10 weeks of pay to a maximum of one week; maximum redundancy pay has been changed from 104 weeks to 52 weeks, “significantly higher than the BFI Award maximum of 16 weeks”; and for those at “job levels 11” and above, a 26-week maximum redundancy pay will continue to apply for AMP executives.
“I understand that some people will have differing views on these changes and that some may be disappointed,” CEO Alexis George (pictured) wrote in a message notifying staff of the changes. “I can assure you that ExCo (executive committee) made these decisions after careful consideration and have created a policy that we believe is fair for all.”
The decision has caused uproar within the most experienced ranks at AMP. The impacted staff are the ones that have, by and large, stayed loyal to the organisation through several years of turmoil, which include revelations at the Hayne Royal Commission that the firm was charging deceased clients ongoing fees for financial advice.
The decision to cut back on entitlements is being perceived as a betrayal of the loyalty shown by these staff. In the financial services community this sentiment will echo the dismay felt in 2019 when AMP changed the terms of BOLR policies so that it could reduce the buy-out multiples of practices from 4.0x to 2.5x, which it said was due to “changed market conditions” that saw the value of these practices plummet.
“This is a very sad day for AMP… (as a) loyal employee who has stuck by AMP through the hard times over the last 30 years to have this happen is disappointing,” wrote one staff member.
“Clearly the bottom line for shareholders is far more important than the loyalty of long-serving employees, particularly those who serve on the front line and who have had to contend with royal commissions, enforceable undertakings and poor decisions from former management,” wrote another.
Since the BOLR settlement, AMP’s post-royal commission executive spine of CEO Alexis George and Wealth lead Matt Lawler brought a new sense of hope that the organisation had reached its nadir and was set to reset the culture and rebuild its name. Under these two AMP streamlined its advice network, became an active player in policy discussion, leant into the strength of its MyNorth wealth platform, gave a full mea culpa for its past indiscretions and said it was ready to learn from them.
Again, however, AMP’s executives are being accused, in the words of an aggrieved staff member, of just wanting to “better their bottom line”.
“I am sorry you feel like this and that you are so unhappy with the workplace,” George wrote in reply to one employee. “It actually saddens me that this is how you feel about AMP and the future.”
Less than a year ago, The Inside Adviser reported that AMP was “spending goodwill it doesn’t have” by challenging the original BOLR court ruling in favour of advisers.
Whether it will have any left after short-changing its most experienced staff remains to be seen. AMP may feel entitled to reduce what are probably overly-generous legacy staff entitlements, but at this point the group’s integrity and loyalty to partners is a far more pressing issue. Fairly or not, the perception will be that AMP has again welched on an existing agreement once it realised the deal wouldn’t work out in its favour.
Do that repeatedly and people stop wanting to do business with you.
