New AMP boss Francesco De Ferrari hires Alex Wade to head advice

New AMP chief Francesco De Ferrari has put his stamp on the embattled wealth group, hiring Alex Wade to lead advice.

New AMP chief executive Francesco De Ferrari. Picture: Bloomberg

Newly installed AMP chief executive Francesco De Ferrari has stressed the need for “failsafes” to manage conflicts of interest at ­financial advice and wealth companies, as he made a key hire to help drive change at the beleaguered group.

While he is still formulating AMP’s strategy, Mr De Ferrari has started to put his stamp on the $7.1 billion company by hiring former Credit Suisse colleague Alex Wade to lead advice.

In his first round of interviews, Mr De Ferrari told The Australian he was closely examining AMP’s incentive and pay structures as he built a plan to resurrect the 169-year-old company.

“The pressure and the responsibility is there to get it right,” he said on day three in the role, throwing his weight behind AMP’s vertically integrated model, albeit with the right safeguards.

“I am a big supporter of vertical integration. Integrated structures can deliver strong outcomes for customers, but we need to make sure within these structures we have all the failsafes to manage conflict, and remuneration is an important piece of that.

“Whatever incentive system you have in a financial institution you need to make sure it aligns the behaviour of the individual to the right outcomes for the client.”

AMP has been battered this year by a range of scandals that have included alleged interference with an independent report prepared for regulators, charging fees for no servive and to dead people. The detail of those — brought to light by the Hayne royal commission — led to the exit of former CEO Craig Meller and chair Catherine Brenner.

“Advice is a very big opportunity for AMP, it is a service that obviously has been under scrutiny from the royal commission, and there is a lot of industry dislocation,” Mr De Ferrari said.

Three of the big four banks have decided offloading their wealth operations is the best course of action.

Alex Wade will lead advice at AMP. Picture: Hollie Adams

Mr Wade was the head of developed and emerging Asia for Credit Suisse Private Banking, overseeing markets including Australia, Japan and India, before his role was split and he parted ways with the firm several months ago. He takes over from Jack Regan — who has not returned to work following gruelling royal commission hearings earlier this year and is retiring from AMP after almost 20 years.

Mr Wade’s career has included a 12-year stint at Credit Suisse, including a stint running the Australian private bank and six years as Asia-Pacific chief of staff. He joins on January 7.

Investors had mixed views on the appointment and the huge task at hand.

“It is probably reasonable to assume that he’s got to make changes … he hasn’t wasted any time,” said Shawn Burns, a senior portfolio manager at Switzer Asset Management.

“There is, though, a moving feast for them to navigate.”

AMP’s shares fell 0.8 per cent to $2.43 and have tumbled 53 per cent this year, leaving the stock not far off its record lows.

Other investors pointed out that experience in private banking — Credit Suisse focuses on upper-end wealthy clients — did not necessarily bring the right skills to AMP.

“It is a very different proposition in terms of the client base and one of the challenges is being able to provide affordable advice,” said Merlon Capital’s principal, Hamish Carlisle.

He has been an advocate to overturn the controversial $3.3bn sale of AMP’s life insurance arm, which in Merlon’s view should have gone to a shareholder vote.

Anthony ‘Jack’ Regan leaves a banking royal commission hearing in Melbourne in April. Picture: AAP

Mr De Ferrari shied away from questions on the size of any future executive shake-up and backed Mr Wade’s ability.

“It was important to appoint someone that I’ve worked with before, I can trust,” he said.

“The (private bank) principles roughly are translatable … What is going to be very different is the delivery mechanism, because obviously the economics are not going to work in the same fashion for a very diverse client base.”

Mr De Ferrari also said AMP was “embedded” in the fabric of Australian society and he was overwhelmed by “genuine interest” in seeing the company recover. “The industry is changing for the better,” he said.