Australian financial advisory firm AMP has notified all of its advisers that ongoing client agreements will be phased out during 2020.
A different system will be put in place; namely an annual advice agreement lasting 12 months, which can be renewed by the client.
This was one of the many recommendations made by commissioner Kenneth Hayne in the country’s Royal Commission report.
Alex Wade, chief executive of AMP Australia, said: “We have been considering the best way to charge for financial advice and factored in a range of issues; including client sentiment, pending legislative change, operational matters and increasing compliance requirements.
“We think annual agreements best serve the interests of clients who want advice over a period of time.
“There are many ways that Australians want to experience financial advice. We believe there is a strong need for enduring relationships between clients and advisers, as well as more episodic advice and ad-hoc advice, where digital solutions will have a role to play.”
Client transparency
The advisory fees will have to be paid in advance, when the client agrees on what services their adviser will provide.
According to Wade, this will increase transparency in the relationship with customers and make the administration and compliance processes easier for advisers.
“We recognise this is an adjustment for many advisers and we’ll be helping them with guidance, tools and templates to help implement the change in their business,” he added.
The change will happen through AMP’s adviser platform to simplify the transition to the annual model and increase standard monitoring across its network.
