AMP’s De Ferrari must align company and client

It’s a long time since an AMP shareholder could say they were hitching a ride with a Ferrari.

Francesco De Ferrari.

It’s a long time since an AMP shareholder could say they were hitching a ride with a Ferrari.

But that is what they are getting in both name and reputation in the appointment of Francesco De Ferrari as the new chief executive.

AMP has reached outside the local executive pool for a foreign marque and says it was forced to do so by the need to retain credibility with investors who have seen the reputation of the local industry and those who lead it trashed by the royal commission.

Chairman David Murray and his board are also looking for experience in dealing with the kind of sweeping overhaul of the industry and intrusive regulation that has happened in other markets that were more severely affected by the global financial crisis.

AMP has been on the nose with investors for at least that long, in large part because it has not been able to find a profitable growth path from the old agent-led way of selling life insurance to a modern system dominated by the growth of superannuation.

Modern mutuals such as the union- and employer-backed industry funds have overtaken its mantle and remained relatively scandal-free in the process.

Still, long-term owners of AMP would have a sense of deja vu in De Ferrari’s appointment.

Approaching the 20th anniversary of its decision to swap mutuality for the sharemarket later this year, AMP has gone for its first external appointment since American George Trumble led the ­company.

In some ways the atmosphere is the same. Like then AMP is in need of cultural change, this time to a business model that has been built around commissions in a conflicted structure, and at a time of heightened regulatory pressure.

De Ferrari comes from a private banking business that does not pay commissions and brings experience in remaking a business in the face of sweeping regulatory change, as he is said to have done with Credit Suisse’s Italian operations after the global financial crisis.

Murray yesterday laid out the challenge for De Ferrari as being to develop a business model for AMP where the company makes a return by earning the trust of its customers.

If it can develop and sell products that align the interests of the company and the investor, AMP has a shot at emerging from this latest low in a position to grow.

“You build tremendous trust with your client because they know that both you and your client are locked in to their own personal objectives,” Murray says.

A fund manager familiar with De Ferrari yesterday described him as a “really impressive” and charismatic individual with strong leadership skills.

The operation he ran in Asia while at Credit Suisse was considered a more complicated business, given it spanned different markets. But he would have to overcome the challenge in his new role of being a relative unknown in the Australian market and with no direct experience of operating here.

The appointment also resolves one of the questions on the merry-go-round of wealth management executives. Andrew Formica — a former AMP executive who recently resigned from Janus Henderson as its co-chief executive — had been speculated as a contender for both the AMP role and the new position heading the demerged advisory businesses of Commonwealth Bank.

His choices have now ­narrowed.