Reforms won't hurt AMP, says Dunn
AUSTRALIA'S largest financial planning network would continue to contribute strong funds growth to AMP despite sweeping changes to planners' business models, AMP chief executive Craig Dunn said yesterday.
AUSTRALIA'S largest financial planning network would continue to contribute strong funds growth to AMP despite sweeping changes to planners' business models, AMP chief executive Craig Dunn said yesterday.Unveiling a 19 per cent lift in underlying first-half profits after tax to $455 million, Mr Dunn pointed to a 12 per cent increase in revenues on the previous corresponding half year for AMP Financial Planning."In a world where that new business is written without commissions ... I think that demonstrates the resilience of the sector," Mr Dunn said.The broader financial planning industry is introducing substantial reforms under the federal government's Future of Financial Advice package.Reforms include a ban on commissions paid to planners and a new legal requirement for planners to act in clients' best interests.After its successful merger with AXA in March, AMP almost doubled the number of its financial planners to more than 4000, making it the largest network of financial planners in Australia.Large wealth management companies' financial planners have previously been criticised for commissions encouraging in-house planners to recommend in-house products, a system known as "tied advice".Commentators have questioned whether such referrals can survive when planners must meet the "best interests" test.But Mr Dunn said he did not see the proposed reforms as "having any effect on our capacity to grow our business", citing the doubling of AMP Flexible Super in the half to $2.8 billion.Mr Dunn described the opt-in element contained with in the reforms as bad policy, which requires customers to "opt in" to receive further service from their financial planner.But he said he supported the bulk of the planner reforms, which would go to improve confidence in the financial planning industry.Mr Dunn revealed a further $20 million in cost savings from the AXA merger, bringing the total targeted savings from the merger to $140 million.Costs to achieve the annual savings increased by $25 million to $310 million. Mr Dunn said the merger was performing well and there had been a strong retention of AXA financial planners.While recognising volatility in the short-term, Mr Dunn said the medium term looked "highly attractive" for investment management business in Australia, buoyed by a lift in superannuation contributions from 9 per cent to 12 per cent.AMP's statutory profits decreased by 18 per cent to $349 million, which AMP attributed to one-offs, including integration and merger costs relating to AXA.The profit was broadly welcomed by analysts as a solid result in line with forecasts. AMP shares finished up 11? at $4.26, in a market that fell by 1.2 per cent.