2020 CEO Survey: Francesco de Ferrari, AMP

The need for financial advice as we emerge from COVID-19 will be significant, says AMP chief Francesco de Ferrari.

What are the three enduring lessons or changes to flow from COVID-19?

The COVID-19 pandemic has shown that we are vulnerable but resilient. Despite the challenges during 2020, the collaboration between business and government to respond to the pandemic illustrates what can be achieved by working together. AMP’s employees have shown their resilience and adaptability this year with 95 per cent of our employees working from home during the height of COVID-19 to ensure we continued to deliver for our clients. We will take forward many insights from the COVID-19 experience on how we can enhance flexible working.

For investors, the downturn in markets earlier in the year proves the value of liquidity in an investment portfolio and the importance of having the right risk-adjusted return, particularly for those in or nearing retirement. As we’ve seen from crises in the past, economies and markets do recover so investors need to hold their nerve during market downturns and focus on the long term.

While stimulus measures announced during COVID-19 will support the economy for years to come, there is a risk that wealth inequality will grow, with asset owners more likely to benefit from policies that will drive up asset prices. It’s critically important that we, as an industry, solve the challenge on how to provide an accessible, affordable financial advice model that will support more Australians.

How would you rate the shape of the Australian economy as we head into the new year?

The resilience of Australia’s economy can be seen with the better than expected GDP growth in the September quarter, alongside improved retail spending and strong employment growth in recent times. Investors are starting to see the optimism of COVID-19 vaccines being reflected in investment markets.

Australia entered the pandemic with an almost negligible deficit, putting it in a strong position compared to other economies. As long as there continues to be both monetary and fiscal support to asset markets and credit creation in economies and banking systems, I expect investment markets will remain positive in the near term.

What three reforms are needed to sustainably grow the economy?

We’re seeing increasingly that Australia is in a position of relative strength following COVID-19, given the effective management of the pandemic. The stimulus measures that have been announced to date are already making a difference to Australia’s recovery as we’ve seen in recent economic data.

Australia will benefit from stimulus initiatives that strengthen what have become the key levers in our economy: exports, infrastructure spend, and domestic business growth.

Establishing and growing relationships with potential new export markets particularly for commodities will be important for long-term sustainable growth. It has always been important but particularly now as the global economy recovers. While international borders have been closed or restricted during COVID-19, recommencing immigration to Australia will be pivotal to future growth and prosperity.

Further deregulation of business will help to drive business growth, encourage innovation and incubate more start-ups, which are an increasing source of employment.

Additional investment in nation-building infrastructure will provide a significant and long-term economic benefit. Australia has a good track record of building quality infrastructure and we have some of the leading infrastructure investors in the world, including AMP Capital.

What are the three best growth opportunities for your company in 2021?

There has been no slowdown in interest for infrastructure investments, particularly from large international investors looking for higher returns in a low-yield environment. We continue to successfully fundraise for our private markets capabilities in our asset management business, AMP Capital, and expect support will continue through 2021.

The need for financial advice as we emerge from COVID-19 will be significant, however the challenge is that the majority of Australians that need advice are unlikely to receive it. There remains an opportunity for the industry to work together on how to get more advice to more Australians.

Our platforms business will also continue to grow. We are enhancing and innovating to provide more products and services to help our clients invest. I expect the industry will remain competitive as more clients join platforms to invest in products that are generating higher returns than cash in the current environment.

What impact will digital transformation have on your company?

Digital transformation in our business started years ago and particularly in our retail business it has opened a new client interface. We are investing in new technology to improve data and processing capabilities, but equally have found that for many clients they want human interaction when they discuss investments to grow their wealth and set up their retirement.

For investors, the digital transformation is opening up different ways to invest and fund infrastructure. For example, our asset management business AMP Capital recently invested on behalf of its clients in the deployment of mobile tower infrastructure across Australia that will help to meet demand for increased mobile connectivity and data speeds.

How would you rate business, state and federal government performance this year?

The pandemic was a black swan event which tested us all. Our governments all responded rapidly and were pretty collaborative even if their policy approaches disagreed. The federal government’s economic response and the quality of our healthcare systems all stood up.

Business played its part as well in responding to the pandemic. There was no playbook, and all industries were impacted – for example, superannuation had to contend a big change to policy with the early release scheme.