Shares of the embattled wealth manager AMP Limited (ASX:AMP) appear to have finally bottomed out. The AMP share price hit a new all-time low of $1.60 just two weeks ago on 3 September, but has since rallied more than 13.5% to today's price of $1.84 (at the time of writing). However, this doesn't take away from the fact that AMP shares are still down nearly 25% from the start of the year and 64% from the start of 2018. So, is this where AMP has finally found its bottom?
What's been happening at AMP?
Well, certainty is always a comfort to investors, and AMP has now set out its total compensation roadmap for all its dastardly deeds that were exposed in last year's Royal Commission. In addition to the $700 million set aside for compensation last year, AMP threw in another $200 million in January, which the company expects will be enough to fund its 3-year remediation program.
Big changes are afoot at AMP – the sale of the company's life insurance arm AMP Life is now looking likely to go ahead after an initial hiccup involving the Reserve Bank of New Zealand. AMP CEO Francesco de Ferrari has also implemented a controversial new policy of valuing the individual network of AMP financial planners by only 2.5x earnings (previously it was on 4x earnings). This means that if an AMP financial advisor wants to sell their business back to AMP, they are now going to get a lot less bang on the buck.
Of course, this was not exactly welcomed by AMP advisors, but shareholders seem to think it's a positive move.
What's next for AMP?
It's difficult to know how much of the brand damage that AMP sustained will stick over the next few years. The company has slashed fees and prices on a number of its wealth management and superannuation products, so this might entice retail investors back, but only time will tell.
In some good news, AMP's Capital division remains a standout performer. Although AMP Capital is only 85% owned by AMP, most of its investment portfolio is located outside Australia and so has been relatively unaffected by its parent company's tribulations. It booked an impressive 27.7% rise in profits as reported in AMP's 2019 financial year earnings – the only bright light in what was an otherwise gloomy set of numbers.
Foolish takeaway
Although I don't have enough certainty on AMP's future to be making an investment myself, I think its very possible that it's only up for AMP from here. In my view, management are making all the right moves, but I'd like to see these quantified and their brand's reputation somewhat restored before considering a position.
