Mike Wilkins admits failure to educate financial adviser network

AMP’s acting chief Mike Wilkins has conceded that the financial services major had not adequately educated its adviser network.

Michael Wilkins leaves the royal commission hearing in Melbourne yesterday. Picture: David Geraghty

AMP’s acting chief executive Mike Wilkins has conceded that it is a failing for the financial services major not to have adequately educated its adviser network that they need to actually provide services in exchange for fees.

“Our policies and procedures were not appropriate or fit for purpose at that time,” he told the royal commission yesterday.

Mr Wilkin’s comments follow a year of chaos for AMP which has wiped billions of dollars from the company’s market capitalisation and triggered an executive clean- out, including former boss Craig Meller.

Revelations from the royal commission in April showed AMP had charged customers millions in fees but failed to deliver any services. This in turn shone a light on AMP’s combative dealings with regulators and the former chairman’s involvement with the preparation of an independent report by law firm Clayton Utz.

Mr Wilkins, the former long-serving Insurance Australia Group chief executive, took charge as executive chairman in May. He later took on the acting CEO role, as former Commonwealth Bank chief executive David Murray was appointed chairman.

Mr Hodge asked whether financial advisers struggled to understand the shift from a distribution network to professionals providing advice and acting in the best interests of clients.

“And the mental shift that many financial advisers seem to find difficult was to understand they were no longer a distribution network for product manufacturers; they were now professionals providing advice and acting in the best interests of clients.

“That was certainly a significant change for a number of people in the advice network,” Mr Wilkins said.

Mr Wilkins told the commission he believed the financial advice industry was “improving” when it came to fees.

“I think where it was coming from was a transaction-by-transaction type arrangement where commissions, including trail commissions, continued. And there was, in the case of that environment, no expectation that services would be delivered for those trail commissions.

Mr Wilkins conceded that as acting CEO it’s impossible for him to go back to a time when he wasn’t involved and understand how the culture developed.

He said he believed there would always be a role for “face-to-face” financial advice. “What we do think, though, is that technology can be used to both assist in the professionalism and the productivity that comes from that face-to-face network. We do think that there can be greater compliance and other productivity tools also built in through the use of technology.

“I think that there is a place for robo advice … but I think it is somewhat limited.”