Like you, the findings so far from the Royal Commission into Financial Services have left us with a feeling of disappointment and disbelief at the behaviour of these organisations. We have had quite a few queries from our clients with AMP products about whether these findings affect them.
The bottom line is that you have no cause for concern. The issues uncovered are not about AMP’s financial performance or stability. There is no direct effect on any AMP product you hold.
AMP as a company, represent about 0.68%* of the value of the top 200 companies in the Australian share market. If you hold say 20% of your investment portfolio in Aussie shares and your Fund Manager holds AMP shares in proportion to the market, then your exposure to the AMP shares could be as little as 0.136%, or $136 for every $100,000 invested, which is a very small amount.
A bit more detail
So as far as AMP is concerned the issues uncovered by the Royal Commission were around Board behaviour and AMP continuing to charge service fees to clients who did not have a financial planner, and therefore weren’t receiving services.
In response, AMP has made changes at the Board level and affected clients have had fees stopped and refunds made.
It’s important to note that these events don’t have any direct impact on any AMP products you might hold. AMP’s operations and obligations regarding products is quite separate from these issues.
In respect of insurance, AMP is one of Australia’s largest insurers with over 2 million customers. They exceed capital reserve requirements and have reinsurance agreements in place with 2 of the world’s largest reinsurers.
In relation to Superannuation and managed funds you may hold, these are in trust structures and held for members’ benefit. They are strictly regulated and the way Super money is held and invested is carefully controlled. The trustee of the Super Fund has a legal duty to manage the fund for your benefit, above that of either the AMP or its shareholders.
If you are still concerned or have questions, please do contact our office on 08 8373 1711 and we’d be happy to chat with you.
* As at 1 May 2018 – source asx200list.com