AMP was one of Australia’s oldest and formerly most trusted companies. Founded in 1849 as the Australian Mutual and Provident Society, AMP was a not-for-profit life insurer for almost 150 years before it demutualised in 1998. Since then it has pursued profits with gusto, if not prudence.
Part of the push to privatise was to have funds to expand, with “vertical integration” all the rage in the financial services sector.
Vertical integration involves a bank or other financial services company providing products all along the financial supply chain. Once a bank might have offered you just banking services, for example. Now it will provide contents and life insurance, financial and retirement planning, and ways to invest in the stock market.
Why is this relevant? In the UK, there are many companies that pursue ‘vertical integration’, yet few consumers really appreciate or understand the impact on their lives and investments. I’m certainly not saying that in the UK, vertically integrated firms will fall from grace as has AMP in Australia, it’s more subtle. The end game is to sell manufactured products. When you talk to these firms, do you really appreciate that’s their end game? It’s hard to know because whoever you talk to is ‘nice’. We think the vertical integration model is broken. Neither is it good for consumers. Of course, we would say that, but we do have a choice. We could easily work for a vertically integrated firm but we choose not to. Why is that?
Just because the people looking after your money tell good stories, maybe its time to ask better questions. We think vertical integration is an everyone problem.
The headline “AMP doesn’t just have a women problem, it has an everyone problem” comes from theconversation.com