The AMP saga continues.

The latest casualty was the resignation of AMP's Chief Risk Officer, which is probably understandable given the revelations of the past month or so, although his comments on LinkedIn were, let's say, "unconventional".

Geoff Wilson from Wilson Asset Management, one of the most experienced fund managers around, publicly questioned whether AMP was a buy at any price, given not only the internal and governance problems that the company is facing, but with a business model out of step with the times, and a business sector that is guaranteed to have unknown regulatory changes imposed on it in the future.

Added to anecdotal evidence of AMP advisors moving out, in line with an industry trend from "big end" to "boutique" this week Macquarie Bank is reportedly moving up the wealth management food chain to focus on HNW investors - a further indication that financial advice for "mums dad's" is not an attractive place to be going forward.

Given ASIC's hard line on advisor commissions, and particularly training commissions, that's probably as true for the adviser as it is for the recipient of the "advice". Whether it is the place to be or not, it is an issue for the retail investor who needs and deserves proper financial advice.

Hedge Clippings looks forward to the dismantling of the vertical integration, tied distribution, and producer heavy Approved Products List model to the day when investment products stand on their merits, not product sales dressed up as advice. However, in spite of the headlines, and the fundamentals behind them, it is worth remembering it is the minority of advisors who are the problem, aided and abetted by the industry structure and poor corporate governance that allowed them to operate that way.

The danger of the Hayne Royal Commission will come from the risk of an over-reaction from politicians, and subsequently regulators, and thus to corporate compliance departments, to the extent that the end consumer will go without the genuine advice that they need. Next week the Commission moves its focus to the small business sector - away from the small investor being delivered products they don't need or want, to small business that need the products, but all too often can't get them!

Meanwhile, APRA is starting to put pressure on industry superannuation funds and their selection of board members without the requisite financial acumen, or rather non-selection of board members from outside the industry with appropriate experience. We don't know whether this will come under the gaze of the Hayne Royal Commission, but if not it should do. With their control of so many trillions of dollars of small investors' retirement funds, the governance, skills and experience required should be no different to a public company board.

Finally onto global markets. So far the S&P500 seems to be defying the 10 year bond market yield, now trading at a tad under 3.1%.

So far ... but watch this space.

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ATTACHED FILESAFM Fund Review - April 2018 (pdf format)

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We thought we'd throw that in before moving on to AMP...

Hedge Clippings remains sceptical about AMP on nearly every count. This is not only based on their past failings as revealed by the Royal Commission, but also on their response in the ensuing crisis, plus market and client perception, and evidence of investors' outflows as a result.

Last Friday AMP responded to the Royal Commission with what sounded suspiciously like a denial of wrongdoing, in spite of the fact that they had been found to have charged clients fees for services not performed, and then lied to ASIC (including at board level) on no less than 20 occasions.

In spite of losing the chief executive, chairman, three directors, and their chief legal counsel, (who we suspect was thrown under the proverbial bus) the tone of AMP's response was one of, if not denial, refusal to accept responsibility.

And yet to quote from the interim chairman's report to the AGM yesterday:

"I begin by reiterating and reaffirming our unreserved apology. We are truly sorry.

The issues highlighted in our advice business are unacceptable.

We let you down.

We have let our customers down.

And we have let the wider community down."

A little further on the blame was attributed to "a small number of individuals in our advice business who made the decision not to follow policy."

And "the situation was compounded through a series of communications that misrepresented the issue to - and therefore serve to mislead - our regulator on several occasions."

"On both counts the behaviour was absolutely unacceptable."

He then tried to claim that the board had accepted accountability, with some 50% of the board having left, or leaving.

The reality is that the previous chairman and CEO only departed when it became completely obvious that their positions were untenable, and the additional board members only resigned when it was clear they would not make it through the AGM. Hardly synonymous with "leaving of their own accord or willingly".

(The acting chairman also regretted having lost all female directors through the process, but the reality is that ALL directors should be appointed based on ability and experience, by what is between their ears, irrespective of gender. Hedge Clippings might be wise to keep out of that argument!)

But now they have the great white hope, David Murray, as the incoming Chairman.

David Murray is undoubtedly qualified and experienced in financial services. He was CEO of the Commonwealth Bank for 13 years from 1992 to 2005, and was the classic career banker having started as a teller, and rising through the ranks based on his undoubted ability.

However the problem is that Murray believes in the same vertically integrated structure which has not only caused such problems in the banking sector, but is also quite likely to come under pressure as the Royal Commission continues its hearings before making its findings and recommendations known early next year.

At CBA David Murray oversaw the acquisition and integration of Colonial, Count, and Aussie Home Loans, all of which have come under fire in various ways, as has the whole vertical integration structure where sales were repackaged as advice.

The danger for AMP will be that Murray still believes in that model and structure, and that his experience almost aligns itself to his DNA.

Murray has a couple of other problems apart from having to find quality directors with the experience and ability to take on the challenge, let alone instilling the change throughout the organisation.

One of them is his relationship with ASIC, where we would imagine that AMP needs to do some serious fence mending, having in 2016 likened ASIC's approach of trying to enforce corporate culture on boards to that of Adolf Hitler.

At least the 2014 Financial System Inquiry, chaired also by Murray, recommended significantly increased powers for ASIC, even though his later comments suggested that boards should not be held liable for a breach of culture.

The reality is that at AMP it has been that the culture, including at board level, as well as the structure of the business, that has been the problem, and it remains to be seen if Murray, in spite of his outstanding credentials and experience, will be able to, or is the best person to lead it into the future.