AMP New Zealand has reaffirmed its commitment to good conduct and culture after releasing its FY18 results, which saw its wealth management business take $57 million in earnings.
New Zealand managing director Blair Vernon said that market conditions were undeniably tough over the past year, primarily driven by the reputational impact of the Australian Royal Commission which saw the firm’s Australian net profit drop by a massive 97%. He says AMP New Zealand will now focus on separating its wealth management business into a standalone unit, and completing its sale of its life arm to Resolution Life.
“It was undoubtedly a challenging year, and I’m really proud of how our business has responded to the challenges it’s faced,” Vernon told Insurance Business, sister publication of NZ Adviser.
“The team has collectively focused on doing the things that matter – both in terms of giving financial advice to clients and paying a significant number of claims, both within our life business and our general insurance business through Suncorp.
“We’ve also done lots of work with our clients in terms of preparing them for their financial future, which is going to be very different over time with regards to retirement needs and outcomes,” he explained. “Our performance outcomes for KiwiSaver, for example, were materially higher than average for our clients – but we’ve also wrapped that up with advice to ensure that clients are actually accumulating their funds, and that’s something we’re really proud of.”
Vernon says 2018 was a particularly challenging year for investment markets, and particularly so for KiwiSaver funds. He says advice in this area has become increasingly important, as KiwiSaver is the only savings vehicle for many New Zealanders looking to purchase a home or save for retirement.
“Because KiwiSaver is in its infancy, investors perhaps hadn’t reacted to any negative effects seen previously,” Vernon said. “But we saw a lot of investor reaction in the fourth quarter, and that was likely long overdue. For us, that speaks to the importance of advice and the work that advisers do. They help people work through the uncertainties of market challenges, and support their clients look beyond the volatility and think about the long-term.”
“From a customer perspective, we’ve also been pretty forthright about issues of conduct and good culture,” he continued. “That’s certainly had a commercial impact to the company; we accept that, and we’ve acknowledged that we’d rather be proud of the way we conduct ourselves in terms of advice and conduct in the market, as opposed to simply posting one-sided sales results.”
“We’re not resting on our laurels, and we’re not for a moment underestimating that there are industry-wide issues. Last year, we took a leadership role by immediately terminating offshore incentives, which at the time was seen as an outlier activity. We therefore stand by our record thus far, we welcome scrutiny, and we will work with the Reserve Bank and FMA as soon as we have our report to hand.”