AMP has today announced it will introduce annual agreements for clients who currently receive ongoing financial advice.

The new system will be introduced during 2020, while ongoing advice agreements will be phased out, for both its aligned and employed advice networks, who are being notified today.

AMP Australia CEO Alex Wade said the move to annual agreements was a step forward in the evolution of AMP’s financial advice business.

“We have been considering the best way to charge for financial advice and factored in a range of issues including client sentiment, pending legislative change, operational matters and increasing compliance requirements”, Mr Wade said.

“We think annual agreements best serve the interests of clients who want advice over a period of time.

“There are many ways that Australians want to experience financial advice. We believe there is a strong need for enduring relationships between clients and advisers, as well as more episodic advice and ad-hoc advice, where digital solutions will have a role to play.”

At the start of an annual agreement, the client and the adviser explicitly agree the services to be provided and fees paid, an arrangement which expires after 12 months.

“Annual agreements will ensure optimum transparency in the relationship between clients and advisers, while simplifying administration and compliance for advisers,” Mr Wade said.

Mr Wade said the change was being introduced over 12 months to give clients and advisers time to adjust.

“We recognise this is an adjustment for many advisers and we’ll be helping them with guidance, tools and templates to help implement the change in their business,” he said.

The agreements will be administered on AMP’s new technology platform for advisers, which will simplify set up and management and ensure high standards are maintained across the adviser network.