A look inside AMP’s new goals-based advice business

A look inside AMP’s new goals-based advice business

AMP today officially launches its long-awaited AMP Advice business, after a long development period during which the financial services giant substantially re-engineered its advice process and technology infrastructure.

AMP Advice currently has 11 operating practices around the country, and aims to have as many as 30 by the end of the year as ipac Securities practices transition to the new model, and as other AMP-aligned practices voluntarily make the move. The ipac brand will eventually disappear as the new advice business expands.

AMP Advice is built on a goals-based approach to advice, with fees charged by advisers in a range according to the complexity of the advice ultimately provided, and completely unrelated to any product that may be required to implement a strategy.

A feature of the new advice process is the reinvention of financial planning practices as Goals Explorer Centres – in an earlier iteration they were referred to as Spark Stores – which are essentially redesigned advice practices that incorporate the new technology and advice infrastructure.

The centres feature a concierge to welcome customers, and coaches to assist customers with the use of goals explorer technology to identify and prioritise goals. AMP has identified 29 common goals as potential starting points for customers to choose from, and they can define their own goals if none fit. Customers are handed on to an adviser only if they want to delve more deeply into the strategies that may underpin achieving their nominated goals.

AMP’s group executive, advice and banking, Rob Caprioli, says the AMP Advice model grew from understanding why the traditional approach to financial planning hadn’t achieved better than about a 20 per cent penetration rate of the potential market.

“We start with the premise that we know when delivered well, financial advice really makes a difference to people’s lives,” he says.

“We were curious about what is it that stopping the 80 per cent from seeking advice. And that led us down this very deep research with customers and advisers, and actually even other hospitality industries, to understand what is it that we may have to do differently.”

Engaging with terms customers understand

Caprioli says individuals do not think in terms of needing superannuation or life insurance or other financial services, but rather, express the need for advice through questions like how to pay off a mortgage, how to retire and support the lifestyle they aspire to.

“Quite often, though, they do not understand what’s involved in that,” he says.

“What is important … may have a whole bunch of financial implications associated with it, but I am not sure that ‘s the starting point that they think about.”

Caprioli says the impetus for AMP was to develop a process that initially engages customers in terms they understand and on issues they relate to.

“The second observation we found was they feel very uncertain about the advice process and what’s involved in it,” he says.

“A lot of them feel very anxious about giving up their information. They don’t know the adviser; they are fearful of the experience; and in a lot of cases they don’t want to feel like they’re silly or [be] feeling uncomfortable. So what we had to think about then was how do we change the whole experience so the customer is empowered, the customer feels in control of the whole process, and the customer, at any point in this process, can pull out without feeling the pressure to go on and be sold to, in terms of products.

“So we started to look at the whole physical experience, as well as using technology.”

Below-the-waterline infrastructure

Caprioli sys the Goals Explorer Centres are designed to be welcoming and relaxing, and customers are “greeted by people who are not there to solve their needs immediately but actually to be engaging and listening”.

“And finally the thing we had to address for both our customers and advisers was to make it simple, to streamline the process,” he says.

“And so that’s where you start to look at the technologies and how do we leverage the touch screens and the business rules that sit underneath the technology. That makes it fairly seamless for the customer, because we’re not bombarding them with a lot of information and a lot of jargon upfront. But secondly, it also makes it much more effective and efficient for the adviser – the goal being that if we can do that, an adviser can spend much more time seeing more customers, not managing the compliance process and managing all the complexities associated with today’s model.

“Then there was the realisation that to actually make this happen there’s a lot of things we’re going to have to do. So the first few years we spent a lot of time building what I call below-the-waterline infrastructure that is required to support this process – things like having the single view of the customer; being able to capture all these interactions we have with a customer into a single place; being able to run various different sorts of analytics across those profiles to identify the goals that are most relevant; lots of different examples.”

Caprioli says that even after all of this, there was evidence that customers “still didn’t get it”, and so the concept of a physical presence was developed.

“We needed to build [what] used to be called the Spark Store and is now called the Goals Explorer Centre, and we found that to be really important because then we could physically show people what we’re talking about,” he says.

“That made a world of difference, and it was almost like the penny dropped. As soon as you come in, feel the space and go through the process, people started to realise what we were talking about in terms of a goals-based advice model that is very different from typically what happens today.”

The birth of real robo-advice?

Caprioli say that what AMP has built for its Goals Explorer Centres amounts to “the first version of robo-advice”.

“Not robo-advice in the sense of here’s a risk profile and here’s an investment allocation; this is actual advice,” he says.

“The way we think about robo-advice is it’s as much about helping our face-to-face advisers provide quality advice in an efficient and effective way. Over time, if a customer has a very simple need, we may be able to help them over the phone as well, but what we’re building out here are what we think are a set of tools that we think is really going to make a difference to the way advice is delivered by our advisers.”

The AMP Advice model marries the goals exploration concept with loss aversion and risk tolerance tools to help advisers gain a complete picture of the customer, and match them to appropriate strategies.


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Source: FEATURE: A look inside AMP’s new goals-based advice business – Professional Planner