AMP Financial Planners Association have announced they will be contesting changes to AMP’s Buyer of Last Resort terms.
AMPFPA CEO, Neil Macdonald, says, “AMP is contractually obliged to consult with us over changes to the terms and also to give our members 13 months’ notice of any change that will have a detrimental effect on them. AMP has done neither.”
Macdonald added AMP’s pinning of BOLR to what it claims is market value of 2.5 times is disingenuous.
“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,” he noted.
“The adviser did not own the client book or any goodwill and would never have paid four times without AMP’s promise to pay four times when the adviser retired from the industry. This was AMP’s mechanism to attract and retain advisers long term. But now, AMP is wanting to keep the four times entry price for itself and only pay back 2.5 times.”
Macdonald continued that AMP has now broken trust with its own customers and its own people.
“The reduction of the multiple applied under the BOLR terms is potentially disastrous to many advisers, particularly those who have given notice but have not yet been bought out.”
Overnight, many advisers who have invested four times recurring revenue and provided years of service to AMP and to their clients, have seen the amount promised by AMP on exit decimated.
“These are typically small business people on the brink of retirement who may now be forced onto Centrelink benefits when they exit.”
Another concern of the association is about AMP advisers who have been induced into debt by AMP to buy books from exiting AMP advisers at four times recurring revenue.
“In many cases advisers had to put up their family homes as security.”
“These were valued by AMP for lending purposes at four times recurring revenue and in most cases the purchase was funded by loans from AMP Bank or another tripartite banking arrangement, again at four times recurring revenue,” said Macdonald. “In many cases advisers had to put up their family homes as security.”
He added some advisers will find repaying the loans extremely difficult and could lose their homes or face bankruptcy.
“We are concerned about the potentially devastating flow-on effect of the financial loss in terms of the mental health of advisers, their families, and their staff, as well as the impact on their clients. What will happen to the clients of the advisers that AMP forces to move on, advisers who cannot, due to AMP imposed restraints of trade, work in the financial services industry for at least three years?”
Is AMP still a Corporate Partner of the AFA.
The best business decision i ever made was to decline the offer to join AMP-FP as an adviser. The only reason i would have joined is due to the BOLR arrangements at 4 times. I sure this is why the majority of advisers joined them in the first place as there is nothing else even remotely attractive about their offer.
AMP advisers who have been screwed over by AMP this is what to do. Get a trusted family member to do the 2 week DFP course. Get them to join another dealer group. Sell your client book to your family member for $1. Then get registered as an adviser with the new dealer group and employed by your family member (basically your own) business Then (if AMP loaned you the $ to buy their books) declare bankrupcy. Then continue to service your clients whilst also taking revenge on AMP
Then get all your FUM out of AMP as they are basically a criminal organisation and dont care about anyone other than their share holders and i think them must actually hate their advisers.
Or take the bastards to court and get the 4 times BOLR payout you were promised when enticed to join these crooks.
The restraints of trade clause being under NSW law may no be enforceable as the clauses imposed are to restrictive and unreasonable.
In my case I had three years and 500 km radius from office which basically means I can not practice in Victoria .
I decided not to challenge being a one man band as they have more money than me.
I think the Association should challenge the standard clauses that AMP us I believe it
to be unreasonable.
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