Recognising the substantial disruption in the wealth management industry, our new strategy aims to meet the growing advice needs of Australians, on their own terms. Our commitment to advice means AMP is uniquely positioned to develop whole-of-wealth client offers, encompassing wealth management, banking and advice.
In our investment management business AMP Capital, we will continue to invest to expand our global footprint through expertise in infrastructure and real estate investments, as well as growing our solutions in public markets. In our banking business, AMP Bank, the focus will be on growing through a broader mix of channels and seeking opportunities for closer integration of banking and wealth offers.
We are also simplifying our portfolio of businesses. The sale of AMP Life is progressing and expected to be complete by 30 June 2020. We are also exploring options to divest our New Zealand wealth management business.
To ensure the success of this strategy, we are making targeted investments. We’ve announced a program to invest between $1 billion and $1.3 billion over the next three years, focused on growth, cost improvement and de-risking the business. This includes $350 million to $450 million to create a leaner, simpler business, and $300 million to $400 million to restructure our advice network and simplify our superannuation business.
In moving to the implementation phase of our strategy, in 2020 we will focus on key drivers of value: simplifying our portfolio; reinventing wealth management in Australia; continuing to grow our successful asset management franchise; and creating a simpler, leaner business. We have outlined 10 strategic priorities against these drivers.
2020 strategic priorities
1. Sale of AMP Life
The sale of our insurance and mature businesses (AMP Life) is progressing well following a revised agreement reached in 2019. This is a complex transaction but we’re on track to complete by 30 June 2020.
2. Divest New Zealand
New Zealand wealth management is a well managed, cost efficient business, but we believe the strongest value for shareholders will be realised from it being a standalone, localised business. We’re in discussions with a number of interested parties and expect to provide an update at or before our half-year results in August 2020.
Reinvent wealth management in Australia
3. Reinvent advice
We believe there is a strong social need for financial advice; however, it is not affordable to everyone who would benefit from it. In the second half of 2019 we embarked on significant reshaping of our adviser network to be more compliant, professional and productive. Our absolute focus is on continuing to provide high quality advice to our clients.
4. Build best-in-class super business
In superannuation, our simplification program has started and following the sale of AMP Life, we expect to accelerate the change that will see us reduce from six superannuation offerings to one, and from around 70 super products to six.1
5. Grow successful platform business
Our key wealth platform business, North, is highly rated by our clients and advisers – and we will continue to invest in North’s features and capability to drive its growth in 2020. External financial advisers (EFAs), not just our aligned advisers, are increasingly utilising the North platform, with EFA inflows into North increasing 44% in 2019.
6. Maintain growth momentum in bank
AMP Bank will focus on improving its technology and integrating with Australian wealth management – our superannuation and advice business. By investing to modernise the bank’s platform, we’ll improve the client experience, deliver efficiencies and help AMP to grow.
Continue to grow successful asset management franchise
7. Grow AMP Capital through differentiated capabilities
Our asset management business AMP Capital delivered a strong performance in 2019 and in 2020 we will continue to build on its success.
In 2019, our real assets businesses (real estate and infrastructure) delivered two of the top 10 largest infrastructure fundraisings in the world. And in public markets, we’ve continued to build a strong track record for performance, including top rankings for our global listed infrastructure and global companies funds.
Create a simpler, leaner business
8. Create simpler, leaner operating model
In 2020, we’ll continue to simplify our business model and create clear accountabilities. We’ve set a target to deliver gross cost savings of $300 million, excluding AMP Capital, by full-year 2022 and we’ve made good progress against this. We’re targeting cumulative gross cost savings of $140 million by 2020.
9. Strengthen risk management
AMP is in the second year of a $100 million investment program to improve risk management, controls and governance, including new technology and systems, training, and a strengthened whistleblowing program. This program is on track to complete by the end of 2020.
10. Transform culture
Culture will play a major role in AMP’s transformation. Creating a high-performance culture is integral to delivering for our shareholders. In 2019, we took the first steps to defining and embedding our values; and in 2020, our focus will be on execution and accountability.