SYDNEY (Reuters) - AMP Ltd AMP.AX could see A$35 billion in investor outflows due to the hit to its reputation from board-level misconduct, analysts at Macquarie Group Ltd MQA.AX said on Friday, sending shares in the Australian wealth manager to a seven-year low.

FILE PHOTO: The logo of Australia's biggest wealth manager, AMP Ltd, adorns their head office building in Sydney, Australia February 9, 2017. REUTERS/David Gray/File Photo

Macquarie analysts forecast the net outflows from wealth management over the next four years, equivalent to about 27 percent of assets under management, after an independent inquiry found the firm had engaged in deceptive conduct.

The broker downgraded the stock rating to “neutral” from “outperform” and lowered its price target to A$4.30 from A$5.65.

AMP shares were down 6.8 percent in morning trading to A$3.69 ($2.78), their lowest level since 2011, while the broader market .AXJO was trading slightly higher.

“We were previously forecasting ongoing margin compression, given AMP’s higher than peer starting point on fees,” Macquarie analysts wrote in a report to clients. “However, we’ve accelerated our margin erosion in earlier years, as fee pressure will likely intensify.”

An AMP spokeswoman did not immediately respond to an email seeking comment.

The Sydney-based fund manager faced an investor revolt at its annual meeting on Thursday, amid allegations it charged fees for no service, doctored an independent report and lied to regulators.

Interim Executive Chairman Mike Wilkins, appointed after predecessor Craig Meller resigned in April in response to the scandal, told the meeting some customers were closing their accounts and there had been an increase in “withdrawal requests”.

AMP earlier reported A$200 million in outflows at its core wealth management business during the three months to the end of March, but said assets under management at its funds management and banking units had increased.

S&P Global warned last week that AMP’s credit worthiness could be downgraded if the scandal impacted its core wealth management business or raised the risk of fines and legal action.