AMP chief Francesco De Ferrari: Coronavirus crisis can be catalyst for change

AMP’s chief says the nation should use the economic recovery from COVID-19 to fix issues in the financial advice sector.

AMP chief executive Francesco De Ferrari Picture: Britta Campion

AMP chief Francesco De Ferrari says Australia will grapple with the spread of COVID-19 for some time, but in economic recovery should use the crisis “as a catalyst” to fix issues in the financial advice sector.

Wealth group AMP now has 95 per cent of staff working from home and last week dumped guidance for its 2020 underlying profit to be “broadly flat” on last year, due to the havoc the pandemic was causing in global economies. However, the company did commit to ruling off its life ­insurance divestment before June 30.

Mr De Ferrari said governments, regulators and companies were rightly focused on the immediate need of supporting the health system and the economy, as the virus caused shutdowns across many industries.

“Unfortunately, the inevitable spread of the virus still has some way to go before we can come out the side,” he told an online ­finance event.

“This is clearly a time of significant uncertainty in Australia and around the world. Our immediate priority must be on protecting the health of our people and the functioning of our health system.

“Economies and markets can, and will, recover.”

Mr De Ferrari said AMP supported the fiscal help announced by the government and the measures to aid business by financial institutions, including his own.

He noted that inquiries to AMP call centres and its financial advisers were at the highest level that the company had “ever seen” in recent weeks as the pandemic led to mass job losses.

AMP is engaging more with its customers during the disruption, but Mr De Ferrari is also turning his mind to how the industry can better function when the recovery takes hold.

“When we come though the worst we must also use this crisis as a catalyst to fix the advice gap we have in this country,” he said, citing data that showed in the past year just 12 per cent of Australians received financial advice.

“Australia has the unique possibility to be the first to effectively solve it.’’

Mr De Ferrari also highlighted that Australians were disengaged with their superannuation, with 70 per cent ending up in a default MySuper option.

“It’s safe to say the majority of us do not have the fund for our individual circumstances,” he said.

AMP believes the $3 trillion superannuation system and its members need to be more aware of factors beyond investment performance, and take into account risk and other factors such as life stage.

Mr De Ferrari also called out the nation’s heavy reliance on property, noting that superannuation accounted for 18 per cent of an average Australian’s asset base, compared to 60 per cent for real estate, including investment properties.

AMP’s shares rallied 5.1 per cent on Monday to $1.335.

In talking about COVID-19, Mr De Ferrari also showed a photograph of AMP’s shareholder meeting in 1919, which was held in tents because of the Spanish flu outbreak.

He also provided insight into how his brother and sister, both working in intensive care units in Italy, were dealing with the pandemic. “Italy underestimated the impact of the disease,” he said, noting his siblings were seeing the stress it put on hospitals first hand and having to decide where ventilators were allocated

Mr De Ferrari said his brother described the situation as “almost as if being in war”.