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’s $100M BOLR bill a win for all sides
Some of its ex-advisers may grumble about the final monetary allocation AMP acquiesced to in the long-running buyer-of-last-resort case, but the result is a clear win for the group behind the class action and an even bigger win for Australia’s second largest wealth management provider.
Late last week AMP settled on the class action proceedings with an agreement to divvie out a maximum $100 million to advisers who challenged the validity of changes made to the BOLR agreements in August 2019 by the provider. These involved all but guaranteed valuations for client books linked to AMP over a number of years.
AMP CEO Alexis George was right on both counts when she said the case had “impacted relationships with our valued advisers” and the settlement was an “important step forward” that allows the group to put the matter in the rear view mirror.
The BOLR case had been an anchor on the group’s impressive recovery from its darkest post-Hayne Royal Commission days, with George and her wealth management aide-de-camp Matt Lawler (pictured) carefully picking a path towards reputational redemption.
Challenging the original ruling last month (which could have seen the compensation amount soar) put the work these two had done repairing AMP’s standing in real jeapardy, but this settlement, just a few weeks later, should mitigate the damage and could mark a turning point in AMP’s relationship with the advice community.
$100 million is a considerable chunk of change, but after analysts like Citi and JP Morgan suggested the bill could have been much higher ($400M?), it’s a reasonable price to pay to satisfy agreements the courts clearly believed AMP were liable for.
The market, for what it’s worth, agreed, with AMP’s share price jumping 6c to 90c within hours of the announcement. It’s still a far cry from AMP’s halcyon era but any indication that the group has passed its nadir will be welcomed by the company’s beleaguered executive spine and battered shareholder cohort.
For the affected advisers, putting the matter in the past should clearly be considered a blessing. Many went through deep anguish and anxiety, with some delaying a well-earned retirement to offset the surprise financial deficit. They pulled themselves off the floor to not only challenge and win the case against a well-armed opponent, but successfully demand a fair level of compensation. Some will want more compensation, and those most egregiously wronged may well be justified in that. But such is the nature of class actions.
When all is said and one, $100M may be a fair middle ground for both sides in the at-times acrimonious dispute. AMP and its ex-advisers aren’t the only ones that benefit from putting this matter to bed; families of those affected will breathe a sigh of relief, as will the industry at large.
Lets hope this is another chapter in the book of redemption for not only AMP, but financial advice in this country.
