by Rob Hosking
“We’re essentially a long term savings provider so we’re getting back to our knitting,” says Tower chief executive of Investment Businesses Tony Hildyard.
Tower launched its wrap business in 2000 and Hildyard says it “never quite got the scale we required” against the bigger players in the market – First New Zealand Capital and Aegis.
“The whole reason for Tower to own a platform business is to distribute investment products. But as it turns out most of the wrap users are using it to hold direct investments because it helps them become more tax-efficient.
“So it wasn't helping us to distribute, really, and it never got to enough scale.”
Hildyard says the transition period has started. “We’ve already talking to the major clients and there are some contractual things to sort out.
But the business was staffed for growth and so we’ve immediately wound those parts back and we’ll be putting resources into the more promising parts of the business.” Tower is lining up the changes and more will follow shortly, he says.
The company last week announced it is outsourcing the administration of its existing $4000 million in work-based superannuation schemes to Jacques Martin.
At the same time it signalled it is gearing up to offer “from the cradle to the grave” savings products which will fit in with the government’s KiwiSaver scheme, although Hildyard says the new product line up will stand even if KiwiSaver does not go ahead.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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