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Australia wealth manager AMP's 'freaked out' customers flee after advice scandal
[SYDNEY]- Australia's oldest wealth manager, AMP Ltd, posted a near nine-fold increase in cash outflows at its wealth management unit on Thursday in the wake of damaging revelations of misconduct, sending its shares down sharply.
The 170-year-old company was accused of charging fees for no service and attempting to deceive regulators at a government-mandated Royal Commission inquiry last year, which led to the loss of its chairman and chief executive. It has since haemorrhaged billions of dollars in funds and is facing class-action lawsuits.
"Last year people were pretty freaked out about what was going on at the Royal Commission, and it's taken a while for that to flow through," said Hugh Dive, chief investment officer at Atlas Funds Management, which sold out of AMP in 2018.
The wealth management unit logged net cash outflows of A$1.77 billion (S$1.69billion) in the quarter to end-March, compared with outflows of A$200 million the same period the prior year, Australia's largest listed wealth manager said in a statement.
Net cash inflows and outflows are a closely watched performance measure for wealth managers as they show the amount of cash that customers are prepared to entrust in the company.
The company noted that its assets under management, which includes investment performance, rose 5 percent "with positive investment markets offseting weaker cash inflows".
AMP shares fell as much as 5 per cent, just above the record lows they hit earlier in 2019. The shares have halved over the past year, while the broader Australian sharemarket has risen, due to a flood of bad news stemming from the Royal Commission.
At his first annual general meeting with the company, chief executive Francesco de Ferrari said he was focusing on restoring stability after last year's upheaval, while chasing new growth opportunities as the Royal Commission had driven out some competitors.
"This transformation for AMP is going to be a multi-year journey and it will not happen overnight," he told the meeting.
Chairman David Murray, who also took his role during the Royal Commission fallout, was re-elected at the meeting, while shareholders voted in favour of the company's executive pay plans, sparing it another board overhaul.
Shareholders can call to oust a company's board if more than a quarter vote against pay plans two years in a row. Well over a quarter voted against last year, but several institutional investors said they would support the company this year.