AMP's $100 million-plus digital planning play in partnership with US-wealth management giant United Capital has the potential to see the company become "Facebook for advice" and create a new revenue stream, according to analysts at Morgan Stanley.
In an interview with The Australian Financial Review the founder of $US20 billion ($25 billion) United Capital said AMP was in the throes of developing a business model that would "deliver a world-class client experience, digitally mobile that gives the adviser the power to service twice as many clients at less cost".
AMP has already launched its goals modelling engine, which is a centrepiece of its customer goals-based advice strategy "Goals 360". Its AMP advice practices got access in December, with all AMP licensees set to start using it by 2019.
But the long-term plans for the advice platform are much greater.
In an exclusive interview AMP's group executive for advice Jack Regan (pictured) said the insights gained from the Australian market could be the basis for the creation of a generic version of the platform, able to be white labelled to financial institutions or advice markets the world over.
"One of the things we [AMP and United Capital] are looking at is bringing [our] two approaches together and having a model which would be exportable into other environments. We want to be modest about the journey, but not necessarily unambitious about what that could lead to," he said.
"We believe United Capital's experience in implementing its goals operating system (Financial Life Partners) and AMP's experience through Goals 360 will be mutually beneficial to our future growth."
Daniel Toohey, an analyst at Morgan Stanley said there are two bets wealth companies are pinning their futures on. Some players are pitching a "product platform" similar to BT's $700 million Panorama. Others, like AMP, are seeing the future as being all about advice and the customer "and in our view we think that's the right one", Mr Toohey said.
"The advice engine could be a platform that is accessible by anyone in the market and effectively white labelled by anyone as a compliant digital solution.
"The opportunity for AMP is to get customers and advisers entangled in the web of digital solutions to become the Facebook for advice. If it can capture the network's benefits that builds scale and barriers to entry," Mr Toohey said.
"No one else is going to invest north of $100 million into advice – the banks aren't. Through their partnerships globally (China Life and United Capital), is the capability exportable? This could mean future revenue streams."
AMP CEO Craig Meller in November told Chanticleer that taking a "big share" of providing an end-to-end advice capability for "all of the institutions on the planet that would be billions of dollars of revenue".
The plan to expand Goals 360 and a practice management solution AMP is building with Salesforce has a working title of the Spark Operating System (Spark O/S), which Mr Regan said was "in the early stages of development."
About a year ago AMP dipped its toe into global markets, opening a Spark store in Beijing with its partner China Life Pension Company. It is a replica of AMP's "Goals 360 experience" store at AMP's headquarters in Circular Quay.
"We've effectively turned into a Chinese mainland version of that. We think Australia's a demanding advice environment and quite a mature one – so the question is can you take that development and those learnings and make those fit for purpose for alternate markets in the delivery of advice?"
Mr Toohey said Goals 360 was a "tech play purpose-built for AMP advisers".
"But it also has opportunities as a marketplace solution. The challenge for AMP is how to capture that opportunity."
Ahead of AMP's full-year results announcement in February, Morgan Stanley is tipping a likely "clean in-line result" after a fractious few years which included pausing its $500 million buyback, two new reinsurance deals and a plan to buy back advice practice.
Unlocking long-term value is likely to demand patience and strong execution," the broker said in an investor note.
This article was originally published by the Australian Financial Review on 28 January 2018. It represents the views of the author only and does not necessarily reflect the views of AMP. The image of Jack Regan credited to Louise Kennerley / Fairfax Syndication.
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