AMP Wealth Management is expected to generate less profit in the current financial year as it battles margin headwinds.

“Wealth management revenues in recent years have been impacted by margin compression following heightened market competition (particularly in KiwiSaver) and increasing regulatory focus on fees,” AMP said in an investor presentation last week.
The road to increased profits is limited as the business is already “operationally efficient business, with a high return on equity and low cost to income.”

“There is limited scope for further cost out with bottom line growth to be driven by improved investment performance and cash flows.”

It says it has continued to simplify it operations through automation and digital transformation" and has reduced its its customer services operations by 30%.

The company says it has "repositioned distribution to be predominantly direct to market via employed advisers (AMP and AdviceFirst) and fully exited aligned advice."

AMP plans to launch new unit trusts in the first half of next year, "leveraging investment in automation and (its) BlackRock partnership."

Like many other managers it is focussing on sustainable investments "reflecting New Zealand market dynamics.

Earlier this year AMP moved $9.6 billion to BlackRock as it shifted from active management to a passive approach.