We were hoping for something special when AMP announced its new strategy on 8 August, but we were disappointed.  

We were hoping to see leadership.  As the owner of Australia’s largest financial planning network, AMP has an opportunity to lead the change and set a new standard as financial planning finally transforms into a profession.

We were disappointed because Australians need a thriving advice profession.  The consumer demand for professional financial planning advice has never been higher.  And it’s only going to increase.  

In the next decade, all of the Baby Boomers will have transitioned into retirement and will need help with their financial decisions as they balance their short-term spending with their long-term responsibilities. The Silent Generation will be grappling with old age and making hard decisions about aged care so that they can grow old with dignity.  And more than $1.5 trillion of wealth will transfer between generations.

We were disappointed because AMP’s strategy is doomed to failure.  Here’s why.

1. They’re just not listening to their clients

The anger of AMP clients is palpable.  Over the past year, AMP has suffered net outflows of more than $3 billion as clients take back control of their money.  They want to see change.

AMP says it wants to be more ‘client focused’.  Well, if that’s true, it should really start listening to them.

If they had asked their clients, they would have learned that one of the most fundamental changes they want to see is a separation of product and advice.  

They want their AMP financial planner to give unbiased advice.  According to CoreData research, almost everyone (93.3%) believes that it’s important that financial advisers give unbiased advice, rather than just sell their institution’s products.  

They want their adviser to be paid only for the advice they provide, and they don’t want the fee to be calculated on the basis of the number of products sold.

And they don’t like the vertically integrated business model.  According to CoreData, compared those who support it, twice as many people believe that advisers should not even be allowed to advise on their employer’s products at all.

But AMP is continuing with its vertically integrated model.  In fact, they’re making it even more vertically integrated by expanding their employee adviser workforce.  

Clients won’t like that at all.  They want their adviser to serve them alone, not other vested interests like their employer. 

2. Transformations are hard even if you’re good at it

According to McKinsey, three in four business transformations fail.  AMP was founded in 1848, and while its corporate structure has changed, its fundamental business operations haven’t in almost 170 years.

Now they’re using words like ‘agile’ and ‘entrepreneurial’ when their culture is anything but.  

But the challenge is even greater for AMP.  Their leadership has failed to address the root cause of its problems: the self-interest that is inherent in a vertically integrated business.  Advisers can’t serve their clients if they’re required to serve their institutional employer.

Well, then, it’s up to us

It will be up to individual practitioners to make the changes required.  We can’t wait for the financial institutions.  

It’s up to the individual advisers to take control of their careers and work with their clients in new and better ways.

That’s what we did.  At When Financial Solutions we’re a new generation professional financial planning practice proudly serving the New England and North West of NSW. We’re retirement specialists, self-employed and unaligned to any financial institutions seeking to bias our advice.  

We serve only our clients, and that should give you confidence that it’s not a matter of ‘if’ you will receive advice in your interests but ‘when’.

Michael Bowman and James McMaster are co-founders of When Financial Solutions