In its results for the first half of 2018, AMP reported that other revenue, which includes SuperConcepts revenues and product fees, increased 11.8 per cent from $51 million in the first half of 2017 to $57 million this half.
Overall revenue for its Australian wealth management business increased 6 per cent from the first half of 2017 to $204 million in the first half of this year.
“The increase in operating earnings was largely due to higher other revenue and lower controllable costs reflecting business efficiencies and lower variable remuneration, which was partly offset by lower investment related income arising from margin compression,” the results stated.
The increase in other revenue, it said, was driven by “growth in advice and SMSF recurring revenues”.
Overall net profit for AMP in the first half of 2018 fell by almost 75 per cent to $115 million, due to an advice remediation provision of $290 million.
The results also indicated that SuperConcepts contributed $21 million from business operations to other revenue in the first half of 2018, a $1-million increase from the first half of 2017.
Across administration and software services, SuperConcepts added 7,520 funds during the first half of 2018 and now supports 66,643 funds, according to AMP, representing 11.2 per cent of the SMSF market.
“AMP currently provides professional administration services to 22,925 funds and software as a service to a further 43,718 funds. Total assets under administration in 1H 18 were $24.2 billion,” it said.
“The growth in funds in 1H 18 was mainly due to the acquisition of the More Superannuation and SMSF Managers SMSF businesses as well as organic fund growth.”
The number of advisers in its SMSF Advice business, which separate to the SuperConcepts business, has fallen 70.9 per cent, from 55 in the first half of 2017 down to 16 for the first half of 2018. AMP noted that there are financial advisers licensed to give SMSF advice in other networks also.
An AMP spokesperson said the drop was expected and part of AMP’s plans to gradually wind down AMP’s SMSF Advice business.
Commenting on its key priorities for the SMSF arm, AMP stated it will focus on developing a “strong SMSF capability with a focus on building scale, efficiency and profitable growth over the medium term”.
“As SuperConcepts continues to grow fund numbers and market share, it is expected to drive scale efficiencies to improve its operating profit contribution.”
It also plans to drive revenue growth for the wealth management arm by “partnering effectively across the AMP group to deliver investment solutions for retail, SMSF and corporate super customers”.
Rob, I would say the demise of what was once the Melb HQ might have a bit to do with slow completions. So many good and experienced people have left and continue to do so and while the words we’re committed to this office are rolled out it seems that no-one in management is walking in the customers shoes. Many of us are still waiting for our 2017 returns with system issues now being blamed.
Interesting summation from Rob. A possible production shortfall. Is it a case of too many chiefs & not enough Indians
There are not too many businesses left for SuperConcepts to acquire. You cant just grow businese through acquisition.
AMP advice move into the accountant advice model seems all but over.
SuperConcepts on the other hand has had a strong half year. One anomaly with the reported numbers though is the nominal increase in revenue of 1m. This is despite an increase in SMSFs supported of over 12%.
Possible reasons for this are
– a decline in unit sale price. Possible given offshoring & scale efficiency.
– actual completion of administration being behind target. Possible given recent ATO statistics regarding industry lodgement.
– numbers might represent commited sales rather than actual production.
Anyway a good result & assuming numbers are solid next years result will be a huge.
Rob the revenue anomaly is a huge concern. The acquisitions of More Super & SuperManagers early in year added around 5500 funds to SuperConcepts administration numbers. That’s around a 30% increase in administration numbers.
Even after allowing for the fact that More Super is a discount offshore operation I would have expected a revenue jump of 4m to 5m in the half year.