Tower revamps distribution

Tower has announced a major revamp of the way it distributes products, with plans to split off distribution into separate businesses and allow partial ownership by its advisers.

Monday, June 19th 2000, 12:00AM

Tower has announced a major revamp of the way it distributes products, with plans to split off distribution into separate businesses and allow partial ownership by its advisers.

Group managing director James Boonzaier says that the company would build separate businesses in the distribution area, both in New Zealand and Australia, and these would be operating by October at the latest. Tower is also launching a master trust here next month, re-launching its Australian master trust Superb and releasing a range of annuity product across the Tasman.

Speaking at the announcement of Tower's half-year results, Boonzaier said that the changes were being driven by the advent of the Financial Services Reform Act in Australia - which kicks in later this year - and by market forces locally.

"I think that the new Financial Services Reform Act, to all intents and purposes, will put the small independent intermediaries out of business," Boonzaier said. "(Obtaining) a licence is going to be ferociously expensive in Australia and compliance, too, will mean a pretty rigorous audit process."

Boonzaier said the distribution structure in each country would probably involve one company wholly owned by Tower with tied advisers, "because we have a lot of advisers who would prefer a structure like that", and one company owned around 60 to 70 per cent by Tower and the rest "by people who are giving the company the business".

"These independents, all of them will be certified financial planners, you can be sure of that.

"It's all about upgrading the quality of the service and advice to the consumer. We also believe there's a major competitive advantage in being the first mover in that area."

Boonzaier said that Tower's current distribution costs as a group were around $50 million.

At the press conference held to announce results, Boonzaier headed off the usual speculation about takeovers or mergers by saying that the company was "very much in the business of forming strategic alliances and I hope to have some really interesting announcements in coming weeks".

"Unless you're very stupid or very arrogant, you will seek strategic alliances in the technology sector," he said.

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