AMP has announced a new system of annual agreements for clients who currently receive ongoing financial advice, set to be introduced in 2020.
It stated ongoing advice agreements will be phased out across its aligned and employed advice networks, who were notified last week.
AMP Australia Chief Executive, Alex Wade, describes the move as a step forward in the evolution of AMP’s financial advice business and will be introduced over 12 months to give clients and advisers time to adjust.
“We have been considering the best way to charge for financial advice and factored in a range of issues including client sentiment, pending legislative change, operational matters and increasing compliance requirements”, Wade said, noting they concluded that annual agreements best serve the interests of clients who want advice over a period of time.
“There are many ways that Australians want to experience financial advice. We believe there is a strong need for enduring relationships between clients and advisers, as well as more episodic advice and ad-hoc advice, where digital solutions will have a role to play,” he added.
“…there is a strong need for enduring relationships between clients and advisers…”
The commencement of an annual agreement involves the client and the adviser explicitly agreeing on the services to be provided and fees paid, with the arrangement expiring after 12 months.
Wade said this approach will ensure the relationship between clients and advisers is as transparent as possible, while simplifying administration and compliance for advisers.
“We recognise this is an adjustment for many advisers and we’ll be helping them with guidance, tools and templates to help implement the change in their business,” said Wade, adding the agreements will be administered on AMP’s new technology platform for advisers, which will simplify set up and management and ensure high standards are maintained across the adviser network.