Ergo exits
Ergo hangs up on selling investment products over the phone.
Wednesday, February 18th 1998, 12:00AM
AMP direct marketing subsidiary Ergo may be doing well in the mortgage business, but it has failed to spark in the investment arena.Good Returns understands Ergo is about to close down its unit trust business and transfer investment money to the Savings and Investment Plan (SIP) run and marketed by AMP.
This move is good news for the investment advisory industry that initially feared AMP's foray into direct, telephone sales when it was launched more than two years ago.
Also it highlights difference between straight commodity-type products like mortgages and the move specialised investment products such as managed funds.
The former can be sold directly with no advice as they are essentially compete on price, while investors buying the latter need advice, and should go through a proper needs analysis before investing money.
Ergo have eight unit trusts in total, which were launched in December 1995.
While AMP's experiment in selling investment products through Ergo has been a failure, the opposite is true with its mortgage business which now has a book of more than $1 billion.
Managing director Graham Meyer, says the direct telephone business was not originally expected to top $1billion until the end of 1999.
He says AMP/Ergo has almost 2 per cent of the $49 billion market, and he expects that to double in the next 12 months.
Meyer says Ergo will have a banking licence by the end of the year, and that will enable it to secure cheaper funding for its loans.
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