Financial Advisers from AMP could be on the path to ruin following terminations from the post-banking royal commission. Financial planners who actually worked for AMP are in the most trouble right now, in the wake of the Hayne Royal commission on banking misconduct.
Though AMP has tried to untangle itself from the issues with Hayne by opting for a brutal restructure of its financial planning environment, this hasn’t solved the problem for everyone. For instance, 190 financial planners aligned with AMP have been told that they’re going to lose their jobs by the end of October.
What’s Next for Financial Advisers?
Most financial advisors aligned with AMP bought their businesses from the company with the promise that they would get good terms if they were ever forced to sell. However, now sacked advisers could be facing ruin instead.
Many professionals have claimed that AMP is robbing them of their career opportunities, and that they’ve been left with nothing to do and nowhere to go following the upset. One financial planner for AMP, Mary Benton has been counselling other planners that have just been terminated. Benton said that many of the professionals are struggling to make good decisions right now because they can’t think straight – they’re overwhelmed with worries about their homes and families.
It’s easy to see why today’s advisers are overwhelmed. The termination letter they received from the AMP gave the planners a deadline of October 31st to accept horrible exit terms. While these terms vary, they allow planners to sell businesses back to AMP for about half of what they paid.
For a long time, AMP guaranteed its planners that they would be able to sell their businesses back at four times their annual earnings. Now, the company is only offering 2.5 times annual earnings. The affected parties say that they would be left with serious debts if they took the deal.
The AMP Deadline is Approaching
Now that the AMP’s deadline is just around the corner, financial advisers are left wondering what they can do. They have no idea whether they’re going to have to continue dealing with huge amounts of debt going forward, or whether they’ll be able to get a better deal from the AMP group. If the advisers fail to decide by the time the deadline arrives, their license will be cancelled, and clients will be removed from them.
Many of the planners who have been affected by the issues have said that they’re dealing with health-altering stress knowing that they’ll have no business or reliable income at the end of the year. Additionally, a lot of these professionals have huge business debts and leases to deal with too.
One adviser who has been in the industry for 10 years said that he has worked hard on his business and brought countless new clients into the fold. Although he doesn’t have any employees that will lose their job, the planner said that the impact on him and his family will be devasting. The planner also noted that although many people won’t have a lot of sympathy for today’s AMP planners after what’s happened, he insisted that most of the people affected by the terminations weren’t the “bad eggs” that came out in the royal commission.
AMP is currently focusing on getting rid of the planners that haven’t made them enough money over the years. The smaller planners that support regular families and clients haven’t done anything wrong, but they’re not earning enough to get any support for their business. These are the people who are being forced to sell their homes and give up everything.
AMP Faces Backlash
Unsurprisingly, many financial planners affected by the AMP issue have attempted to contact the board to make sure that they get the right support going forward, but no-one has yet received a response. Ombudsman Kate Carnell said that the group is aware of the situation, and that a lot of financial planners were being treated unfairly in relation to their contracts with AMP. The issue is a major one that requires a lot of further investigation, and people who are involved are being urged to get in touch with the small business ombudsman office.
The Financial Services Union is also currently negotiating with AMP on the behalf of various members and will be reaching a conclusion as soon as possible. There are also some rumours floating around that a class action law suit will be taking place against the AMP and it will be announced in a few days. The NSW Shadow Minister for small business and finance is also pushing the NSW government to conduct further investigations.
In a statement, AMP announced that they care deeply about the advisers in their community, and the families that they care for. AMP also said that it has offered the planners support in the form of counseling and other options.