AMP Financial Services. AMP Financial Services - market update. Craig Dunn Managing Director. 22 June 2005

Transcription

1 AMP Financial Services - market update Craig Dunn Managing Director AMP Financial Services 22 June 2005

2 Agenda AMP Financial Services (AFS) competitive position Perspectives on super choice, margins and pricing, DIY Review of two significant growth opportunities: AMP Financial Planning AMP Corporate Superannuation 2

3 AFS competitive strengths sustainable, focused on growth AFS has a sustainable competitive advantage, driven by: iconic, resilient brand unmatched strength in distribution scale and focus in product manufacturing 3

4 AFS strategy simple, focused, disciplined Advice-Based Distribution to be the partner of choice for financial planners and lead the market space for quality advice Product Manufacturing to deliver market competitive products at the lowest unit cost 4

5 AFS net retail cash flows, ranking and industry share AMP net cash flows A$m 3,500 AMP rolling 12 month net retail cash flows (excluding CMTs), ranking and AMP net cash flows as % of industry total % of industry total 16% 3, % 2,500 2,000 1, % 10% 8% 6% 1, % % 0 01 Sep Sep Sep Sep % Source: Plan for Life March 2005, Retail Managed Funds Report Note: Number above box represents relative industry ranking in year ending quarter / rankings exclude badged products AMP net retail cash flows (ex CMTs) as % of industry total 5

6 AFS holds leading market positions Market share- Australia Funds under management $billion Super including rollovers Retirement Income 1 Total market size A$b March 2005 Market position (rank) Market share % Total market size A$b March 2004 Market position (rank) Market share % % % % % Total Super and Retirement Income % % Unit trusts excluding CMT Total retail managed funds % % % % 3 December 2004 December 2003 Total Annual Inflows $billion Individual Risk % % 1. Source: Plan for Life March 2005, Retail Managed Funds Report 2. Includes CMT 3. Source: Plan for Life December 2004, Life Insurance Risk Premium Inflows and Sales Report 6

7 Organic growth across major market segments continues to recover Organic growth* of total market segments (over rolling 12 months March 1996 to March 2005) 25.0% 4, % 4,000 3,500 Organic growth (%) 15.0% 10.0% 5.0% 3,000 2,500 2,000 1,500 All Ords Index 0.0% 1, % 96 Sep Sep Sep Sep Sep Sep Sep Sep Sep Source: Plan for Life March 2005 * Organic growth defined as rolling 12 month net cash flows divided by opening AUM Super (incl rollover) Retirement Income Unit Trusts (ex CMTs) All Retail (ex CMTs) 7

8 AFS leads market in super sector Total industry net cash flows (rolling 12 months) 17,511 16,063 March 2000 versus March ,040 7,490 4,654 2,906 6,946 6,145 A$m All Retail (ex CMTs) Super (incl rollover) Retirement Income Unit Trust (ex CMTs) CAGR AUM 11.5% 13.1% 9.8% 12.0% Source: Plan for Life March

9 Perspective choice of super fund AMP is a strong supporter of choice and is well positioned to benefit from the change 1 July start date not a deadline for consumers expect choice to lead to gradual changes to the industry over the medium term believe life events, eg change in employment or retirement, are main reasons why consumers shift funds likely that consumers will seek advice when making a decision Market speculation around industry super funds and potential new entrants Good environment for organisations with a strong brand, scale and advice capability all attributes of AFS 9

10 Perspective margins and pricing Drivers of pricing are different for each superannuation segment AFS approach to pricing sophisticated and segmented AFS approach to repricing: conduct infrequently apply strategically (ie, apply to particular products and market segments; maintain value proposition so don t need to be lowest priced provider) 10

11 Perspective DIY Drivers Quick growth off a low base driven by both cyclical and structural factors (ie, changes in equity markets, tax benefits) number of new funds registered has dropped in the past year* recent US reports suggest shift away from DIY Future growth not as certain, with increasing regulator oversight and decreasing tax advantages AFS position High growth sectors (eg, DIY) don t always indicate high profit Focus on sectors where we have strong competitive advantage, see sustainable growth and deliver profit where appropriate and profitable, presence already established in DIY market through selected planners *Source: ATO Deputy Commissioner March

12 Review of two significant growth opportunities AMP Financial Planning AMP Corporate Superannuation 12

13 Comparative advantage distribution scale, quality and tenure Number of Australian financial planners June ,591* AMP Planner age profile 19% Average age 46 25% 15% 19% 14% 8% ,267 Average of competitors surveyed 16.5% 25% 17.5% 16% 14% 11% % 20% 40% 60% 80% 100% <35 y.o. >=35 and <45 y.o. >=45 and <50 y.o. >=50 and <55 y.o. >=55 and <60 y.o. >=60 y.o AMP NAB CBA WBC ANZ/ING AXA Number of Certified Financial Planners Average planner tenure AMP Average of competitors surveyed 49% more than 10 years 15% more than 10 years Source: Money Management 2004 Note: ANZ, CBA did not provide 2004 CFP numbers *1,591 Australia only (including Hillross). Total AMP planner numbers including New Zealand is 1,856 Source: Tillinghast-Towers Perrin Distribution Benchmark Survey

14 Strengthening key comparative advantage distribution network 12 months into rejuvenation and restructuring program in AMP Financial Planning (eg, field management restructure, planner accreditation, retirement specialists, advice packages) Program designed to increase planner productivity by: improving planners financial advice and business practice management skills segmenting planners to service customers more efficiently and profitably 14

15 Review of two significant growth opportunities AMP Financial Planning AMP Corporate Superannuation 15

16 Strong growth expected in superannuation, particularly from employer-sponsored master trusts Market growth contemporary super * Market share FUM 1,600,000 1,400,000 CAGR % June 2004 June 2014 A$559 billion A$1.5 trillion 1,200,000 13% 24% 20% 26% 20% 1,000, ,000 1% 11% 23% 14% 9% 10% 14% 19% 17% 4% 600, ,000 17% Public Sector Funds Corporate Super 200,000 11% Personal Super, ERF, RSAs Industry Funds Employer Sponsored Master Trusts DIY / SMSF A$m E 2014E Source: Dexx&R Market Projections Report March 2005 (7 th edition); based on data as at 30 June 2004 *Contemporary super excludes conventional super products; also excludes balance of super statutory funds Note: 10% CAGR total contemporary super 16

17 Comparative advantage of AMP corporate super from client perspective Leading market position and strong brand Strong range of features and benefits, according to independent review Scale position of $25 billion* across one super platform for corporate and retail super allowing investment in product development and platforms providing access to leading fund managers at competitive prices Easy access to Australia s largest group of financial planners Choice and ease of transitioning to retail products (eg, corporate super to personal super) when appropriate *Source: Dexx&R and internal AMP data 17

18 Downstream value of AMP corporate super Corporate Super Job change Personal Super Corporate Super Job change Retail Risk Products Corporate Super Job change Banking Products Corporate Super Retirement Allocated Pension Corporate Super Life event Beneficiary s Allocated Pension 18

19 Summary AMP s core markets continue to exhibit robust growth Competitive strengths strongly position AFS to leverage these market opportunities and meet future challenges These strengths provide AFS sustainable competitive advantage: iconic, resilient brand unmatched strength in distribution scale and focus in product manufacturing Focus on driving the business hard and building on competitive positions to grow strongly and profitably 19