- Wealth managing giant AMP is still feeling the effects of the Royal Commission as the September quarter saw record net cash outflows
- The outflows were the result of high regular pension payments on top of $200 million in fees from the recent Protecting Your Super legislation
- The legislation was introduced in March in response to the Royal Commission and is designed to protect super savings from fees and insurance costs
- However, the company maintains that the quarter fell within company expectations
- Shares in AMP are up 1.21 per cent in mid-afternoon trade, currently worth $1.81 each
AMP is still feeling the effects of the Hayne Royal Commission and subsequent legislation changes, as highlighted in its latest quarterly report.
According to the report, the September quarter saw the $7.1 billion cash inflows from AMP’s wealth management businesses balanced by $9 billion of cash outflows — bringing net outflows to a record $1.9 billion.
AMP says the outflows took a hit from $600 million in regular pension payments on top of $200 million in fees from the introduction of the recent Protecting Your Super legislation.
This legislation came into effect on March 2019 and was passed to protect super savings from fees and insurance costs.
Essentially, the legislation banned exit fees, capped administration and investment fees, and transferred any super accounts with low balances to the Australian Taxation Office.
Looking ahead, AMP said it expects corporate super outflows of roughly $1.4 billion over the next 12 months.
However, CEO Francesco De Ferrari said the quarter did not surprise company management.
“Each of our businesses performed broadly as expected during the third quarter,” Francesco said.
He said Australian wealth management, in particular, is rebuilding its business model to better suit client needs.
“We have achieved stronger inflows during Q3, reflecting our improved fee competitiveness, but also higher outflows as the new Protecting Your Super legislation was implemented in Australia,” he said.
The wealth management business’ total assets under management (AUM) were slightly up from the previous quarter, coming in at roughly $133 billion.
The AMP Capital business followed suit, with AUM ending the quarter at $202 billion compared to last quarter’s $199.6 billion.
New Zealand wealth management just missed the green, however, with AUM coming in at $11.78 billion compared to last quarter’s $11.96 billion.
While the quarter may have fallen slightly short of market expectations for AMP, shareholders have responded positively to today’s news.
Shares in the ASX 200-listed finance company are up 1.21 per cent in mid-afternoon trade, currently worth $1.81 each at 1:28 pm AEDT.