December 2, 2021

Remarkable Mate

Remarkable business & finance

Alexis George seeks a cultural reset as she takes on battered AMP

“I’m not naive. We’ve got challenges. I know we’ve got opportunities. I want to be part of that team that restores faith and trust in this organisation.”

Challenges is somewhat of a euphemism. AMP shares are trading 80 per cent lower than before the Hayne royal commission, which levelled allegations of criminal misconduct against the wealth manager.

‘Harassment not acceptable’

Staff and shareholder furore over the board’s handling of sexual harassment complaints – after the Financial Review revealed AMP promoted Boe Pahari to chief executive of its crown-jewel funds management arm despite settling such a claim against him in 2017 – further hindered predecessor Francesco De Ferrari’s efforts to turn around the 172-year-old company’s fortunes.

Asked if she would have promoted Mr Pahari, Ms George said: “I wasn’t there [and] I don’t know a lot about the detail.”

But she acknowledged the company’s cultural problems, saying she had zero tolerance for bullying and harassment, adding that one of her major strengths was her ability to engage with people.

“Harassment is just not acceptable in the workforce in any shape or form,” Ms George said, adding that she was working hard to make herself available to staff, shareholders and the community.

“I think the second thing I said to staff on the very first day in the organisation was that I had six priorities. One of them was absolutely about continuing the cultural transformation that they began before I started.

“I think it’s really important for me to focus on the future, make sure that I know I’ve got the processes and systems in place to make sure this doesn’t happen.”

All AMP executives, including Ms George, have completed “inclusion” training, which is now being rolled out as mandatory for all employees.

Ms George also broke with her predecessors, backing the withdrawal of the major banks from superannuation and financial advice and opening up for the first time about the sale of ANZ Wealth.

The former deputy CEO of ANZ Banking Group and group executive of the lenders’ wealth arm said selling the superannuation and financial advice business to IOOF was “the right decision at the time and still the right decision”.

Ms George said bank-owned wealth managers had struggled to get the sufficient “attention and investment” required to develop quality products and provide advice to customers.

However, she added that announcing that wealth market exit to ANZ staff was difficult.

“Wealth goes to the core of my being, so to sit in front of our people and say that we’re selling a business was one of the hardest things I’ve ever done in my life,” she said.

Platform priority

Mr De Ferrari and former AMP Australia boss Alex Wade, who abruptly departed AMP last year after allegedly sending lewd photos to a colleague, had been critical of the banks’ decision to abandon the market, with Mr Wade telling the Financial Review in January last year it was “sad they’re leaving”.

The highly respected new-broom CEO said she would focus on expanding the wealth group’s platforms (administrative technology used by financial advisers to manage assets on behalf of clients) and banking businesses, while ensuring it remained competitive in superannuation.

The company, she said, would look different in the next few months, given the plans to demerge the rump of wholly-owned subsidiary AMP Capital in the first half of 2022.

The lucrative private markets division of AMP Capital will be separately listed on the Australian Securities Exchange after AMP failed to find a buyer for the business. Talks with California-based Ares Management fell through in March.

AMP will also sell its global equities and fixed income business to Macquarie.

Ms George did not rule out acquisitions of other platforms, recognising that it was a business that benefited from scale.

“The platforms businesses is really important. They have a really good proposition at the moment. We really do need to continue to grow that. And I don’t see any reason why we can’t,” Ms George told delegates at the Summit.

She did not rule out the prospect of a bid for Westpac’s BT Panorama platform, which is one of several wealth management assets “under review” by Australia’s oldest bank.

”You want to understand what discussions are going on to be able to make decisions,” Ms George said.

She said AMP Bank had great potential, particularly given it was a pure online operation.

“I really think we have a unique position with our bank. It’s a small digital only bank. It’s got good cost to income ratios, and we’ve got good returns. There’s a real opportunity to grow,” Ms George said, adding that she would also focus on lifting the profile of the lending arm.

“No one knows about us,” she said.

AMP would look to partner with fintechs,” Ms George said.

“My view is that as we move into this new world, I think partnering is going to be a skill that all companies have to have. We can’t build everything ourselves.

“We don’t have the capability. We don’t have the capacity to be able to build this all ourselves. So it’s absolutely something I’m focused on, not just for the bank, but in the other areas as well. Certainly right now it’s a focus for us in the bank,” Ms George said.

Ms George was guarded about her strategy to reform the financial advice operations saying: “We’re continuing to focus on utilising technology better in our advice space, but we’ve got to find the right mechanism to be able to offer advice to everyday Australians. And I don’t think any of us have got that right.”

Mr De Ferrari had committed AMP to experimenting with “episodic” or scaled version of financial advice, where consumers pay smaller fees to access limited-scope, one-off advice at certain points in their lives, such as marriage or retirement.

He also embarked on a hardline strategy on AMP’s financial advice network, forcibly exiting large swathes of its aligned advisers deemed “unsustainable”. That cull of aligned firms sparked a class action lawsuit, which plaintiffs hope might be settled by Ms George.

The new CEO said that while AMP’s network of aligned planners – the nation’s largest before IOOF acquired National Australia Bank’s MLC Wealth – remained an important part of the strategy, she was more focused on scoring new business from independent financial advice firms for AMP’s North platform and remaining managed funds following the demerger of AMP Capital.

On Monday, AMP Capital’s unlisted shopping centre fund has offloaded a New Zealand mall for $NZ88.8 million ($85.8 million) as part of a broader divestment strategy being pursued by the AMP Capital Shopping Centre Fund as it builds its firepower to step up investment in destination-style malls.

Ms George’s comments come as AMP announced AMP Capital will remain trustee of the Wholesale Office Fund despite reports GPT and Mirvac were interested in taking over the $7 billion property fund.

She is expected to outline her strategy to turn around AMP’s fortunes at an investor briefing this month.

Equity analysts have spoken of “growing expectations” about the briefing, eager to hear how Ms George might continue or diverge from Mr De Ferrari’s hardline stance on financial advisers and focus on tech-based advice services.

https://www.afr.com/companies/financial-services/why-amp-ceo-alexis-george-took-the-toughest-gig-in-finance-20211122-p59b2e