August 12, 2019
Synchron Chair, Michael Harrison, says AMP’s new strategy for wealth management, is a ‘return to the dark ages’, where institutions make and create product and force people into them, with respect to what an individual actually needs given little thought.
“The AMP announcements are very bad news,” said Harrison, “And it’s a state of affairs that has been largely brought about by oppressive, anti-adviser government reforms.”
He argued that although the Royal Commission identified that the core of the problems in the wealth management industry lies with banks and institutions, the sanctions introduced before and afterwards mean advisers suffer consequences and bear a growing burden of obligations.
“To make matters worse, governments, and institutions with big budgets, appear to have also somehow manipulated the rhetoric to such an extent that many people seem to genuinely believe advisers have brought the current set of circumstances on themselves and have no empathy for them,” continued Harrison.
He noted that there was little to indicate during the Royal Commission that most advisers were doing the wrong thing, but a great deal of evidence that institutions, including AMP, did a great deal wrong.
“What many people have failed to understand is that AMP and the institutions were largely responsible for the fees-for-no-service debacle, not advisers.”
“What many people have failed to understand is that AMP and the institutions were largely responsible for the fees-for-no-service debacle, not advisers,” he said.
“For example, when AMP bought back books of clients from exiting advisers that it couldn’t immediately on-sell to other AMP advisers, it went on raking in fees from those clients without organising any service. That is nobody’s fault but AMP’s and yet, somehow, most unfairly, the fees-for-no-service issue has still been perceived as poor adviser behaviour. In the simplest of terms, it is wrong to make AMP advisers suffer for AMP’s sins.”
Harrison said that while AMP has refused to be drawn on exactly how many advisers will be forced to exit the industry following the rationalisation of its adviser network, the estimates range from 30 percent to as many as 80 percent of its adviser network.
“How does the exit of advisers – who are legally required to work in the best interests of their clients – in favour of direct channels, improve outcomes for consumers? It’s clear that all this will do is push people into products. Is that, sincerely, what the Government wants?” he asked, adding the Government has mismanaged the financial services industry to such an extent that it has effectively handed institutions like AMP a free pass.
“The fundamental question governments and institutions need to ask themselves now is, how are consumers better off without advice?”