AMP will aggressively pursue corporate superannuation mandates and target retirement savers looking to beat the changes to super contribution caps as part of a plan to boost cashflow at the struggling group and return it to growth.
In a letter obtained by The Australian Financial Review, AMP's group executive, wealth solution and customer Paul Sainsbury prepared staff for a "significant fall in profit" when it announces its financial results next week.
"We know we have to come quickly out of the blocks this year with solid plans to help our customers with their goals, generate cashflow and return strong growth to our business," he said.
"Our cashflow targets are ambitious, but growing AMP is what the market and our shareholders expect of us."
AMP has been beset by problems in its life insurance operations and pressure is mounting on chief executive Craig Mellor. In October last year, AMP wrote down the value of its life insurance arm by $668 million, which saw its shares tumble by more than 10 per cent in one day.
As part of the rescue plan, Mr Sainsbury said that AMP had "big plans to win more corporate super mandates, and defend the ones we have, by providing the best overall proposition in the market".
Acquisition channel
Currently 80 per cent of new customers come to AMP via its employer super agreements, making it AMP's "most important acquisition channel", according to Mr Sainsbury.
"We have some very large mandates we're working to win, not to mention retaining the number of plans of various sizes that come up for renewal each," he said.
"We'll also work hard to better engage our corporate super customers, through ever-improving welcome experiences, relevant offers and proactive help to navigate key life events. All of this will not only drive cashflow, it will also help customers achieve their goals."
AMP has employer super arrangements that include mandates with Woolworths, Coca-Cola Amatil, Caltex and Optus.
As part of its cashflow goals, AMP also plans to "maximise the benefits" of super legislation changes that are coming in from July 1.
Mr Sainsbury said that AMP had begun "upskilling advisers" and would be using "every capability" we have available to capitalise on the changes.
"We are well under way in developing and implementing marketing and business campaigns – via corporate super, advisers, direct and to employees – so that we can make the most of this once-a-decade opportunity and help customers retire right down the track," he said.
"We're expecting substantial cashflows as a result of these campaigns."
For the months of November and December 2016 combined, Commonwealth Bank of Australia's superannuation provider Colonial First State saw an increase of more than 35 per cent in voluntary contributions, compared to the prior two months.
Goal-based offers
Mr Sainsbury said that AMP would also continue to focus on its goal-based offers and in the third quarter of its financial year it would focus on the launch of Challenger annuities on its wealth platforms to claw back losses.
"This will provide a richer and more integrated experience for our customers and capture some of around $600 million we lose in this segment each year," he said.
AMP's ambitious growth plans come as the financial giant struggles under the weight of an under-pressure life insurance business. The market is preparing for a fresh round of cost cutting that is likely to be announced at its February half-year results. .
AMP shares dropped from a 52-week high of $5.96 in August 2016 to just $4.42 in November, but have since recovered to $5.09 at Monday's close.
"AMP is struggling and we are not confident of a quick turnaround from its accident-prone life insurance business," Morningstar wrote in an investor note.
"AMP is well placed to take advantage of the growing pool of superannuation and fund management assets as the superannuation industry doubles in size by 2026. Challenges in wealth protection continue to weigh on the business."
