Tower ills take toll on funds management arm

Tower Asset Management has fallen victim to the continuing instability of the widerTowergroup, receiving a weak rating from research houseMorningstarfor its business and management capabilities.

In its latest qualitative review of the fund manager, released today, Morningstar rated Tower Asset Management with a two out of five, putting the New Zealand based group in the bottom third of investment managers.

The mediocre assessment by Morningstar comes just one week after the Tower group announced the departure of both managing director James Boonzaier and chief operating executive Ken Boag.

Both departures followed a wide scale restructure of the Tower group, which resulted in Tower’s five separate Australian wealth management businesses being merged to form one entity.

Tower has claimed that Tower Asset Management would be unaffected by the restructure.

But Morningstar head of research Daisy Chee says the uncertainty surrounding the future of the entire Tower group had spilled over into an air of instability around the group’s funds management arm.

She says the latest uncertainty only adds to the anxiety felt by analysts over Tower Asset Management since the departure of its former chief executive, Derek Goodyer, and more than half of its Australian equity team in 2000.

“When you have that level of departures over the last couple of years it does bring a degree of instability,” she says.

Morningstar has also foreshadowed further instability at Tower, signalling in its report the likelihood of further departures from the group.

“The possibility of further departures cannot be discounted. Morningstar expects that at the very least there will be more changes within the organisation as Tower attempts to add clarity to its strategic direction and boost its ailing share price,” the report says.