AMP to divest advice businesses in JV deal with Entireti and AZ Next Generation Advisory
AMP Ltd (ASX: AMP) has announced it will divest its advice businesses including Charter Financial Services, Hillross Financial Services and AMP Financial Planning, as well as Jigsaw Advice Solutions, to Entireti Services and AZ Next Generation Advisory (NGA) for $10.2 million.
Consideration for the deal will be paid 70% in cash and 30% as AMP’s equity stake in the new joint venture (JV) that will hold the firm’s three licensees and self-licenced Jigsaw.
AZ NGA will also acquire AMP’s minority stakes in 16 advice practices for $82.2m.
Strategic partnership
AMP and Entireti will form a strategic partnership to deliver the scaled model, with AMP Advice resources to be transferred to Entireti.
As part of the partnership, Entireti — formed as a parent company of Fortnum Private Wealth and Professional Financial Services — will deliver comprehensive licencing and business services to AMP’s advice network while servicing its existing licensees.
The partnership will see Entireti become Australia’s largest financial advice business service provider with over 1,300 advisers.
‘Right fit’
AMP chief executive officer Alexis George said the deal was expected to transform the advice industry landscape in Australia.
“We have been dedicated to creating a new model for our advice business to provide certainty for AMP advisers and our people and we believe this partnership achieves our goals and is the right strategic fit,” she said.
“It was important in choosing these two partners that they had a strong track record, deep experience and shared AMP’s commitment to delivering quality advice to more Australians.”
Recent changes
The partnership is expected to complement recent changes to AMP’s advice business that have included the introduction of a new service model, the launch of an approved product list, reduced operating costs and improved services to advisers.
“Advisers will benefit from the combined scale of these businesses, delivering new services and technology with capital backing,” Ms George said.
“We are committed to supporting advisers through this transition and enabling them to enhance their value proposition for clients.”
Economies of scale
Under the new JV, AMP, Entireti and AZ NGA will deliver a model with economies of scale, the capital to support practice growth and succession and dedicated services and technology backed by considerable market expertise.
AMP said there would be no changes to the terms or conditions for advice practices as part of the transition to the new ownership – including professional service fees – for at least two years.
Financial support will also be offered to practices to minimise any impacts of the transition, and there will be an opportunity for advisers to acquire equity in the new entity.
The transaction is due for completion by the end of December.