Tower sells out of financial planning business

Philip Macalister

Wednesday 23rd July 2003

Tower has sold its financial planning business Goldridge to the firm's 12 founding principals, and management which includes chief executive Bernie Long.

Goldridge was formed two years ago out of the former Tower Financial Advisory Services, and, until this deal, was 85% owned by Tower.

Long says cutting the ties with Tower will free up the company. Over the past few years there has been quite a bit of tension between Tower and the advisory force over issues such as what products they sell.

Long says Tower's ownership has "inhibited" the growth of Goldridge as people didn't want to be in a firm which was closely associated with a fund manager.

Currently about 37% of Goldridge's funds under management is in Tower products.

Long says the ownership of the company will be built around what business the founding principals write over the next few years. Also between 40-50% of the shares in the company have been put in trust for new advisers when they join the firm.

He says Goldridge aims to add another 10 principals and 12 associates over the next two years. Currently the company has about $200 million in funds under management and aims to have $400 million in four years time and all that money will be on its administrative platform.

"The close association with Tower during the early development stages of Goldridge has been vital to its success," Long says. "We have now matured to a point, where as part of our next growth phase, we are on a path to attract additional like-minded financial planners as shareholder principals. With ownership now fully within the group, we can demonstrate the control of our own destiny."

"Participation in Goldridge as a shareholder principal allows incoming advisers to create for themselves another important level of company shareholder value, in addition to the value inherent in the income stream of their practice."

Although Tower has sold out of the business it will still have a strong with Goldridge as it currently provides its Wealth Management Investment Service master trust and will build a wrap account for the firm.

"Tower's strategic objectives in participating in the establishment of Goldridge have now been realised with the introduction and success of the Wealth Management Investment Service under the Goldridge banner," Tower general manager risk and investment products Richard Baker says. "The branded product, a master trust with innovative features, has received significant support since its launch two years ago in a difficult market."

The price paid for the business has not been disclosed, however Long says Goldridge is valued at more than $2 million. He says the value of the business was set on a future cash flow basis and Tower had provided funding for the advisers and management to buy the business.

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