Wealth giant AMP has announced it will introduce annual agreements for clients who currently receive ongoing financial advice, starting next year.
AMP said the new system will replace ongoing advice agreements for both its aligned and employed advice networks, who were notified last week.
“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,” said Alex Wade, AMP Australia CEO. “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.”
Under the new system, the client and the adviser will commence the annual agreement by explicitly agreeing on the services to be provided and fees to be paid – an arrangement which expires after 12 months.
“Annual agreements will ensure optimum transparency in the relationship between clients and advisers, while simplifying administration and compliance for advisers,” Wade said.
The AMP leader said the change was being introduced over 12 months to allow clients and advisers to adjust to the new system, with AMP providing advisers with “guidance, tools, and templates to help implement the change in their business.”
The agreements will be administered on AMP’s new technology platform for advisers, which will simplify set-up and management and ensure high standards are maintained across the adviser network, AMP said.