The retail distribution review (RDR) may have forced Towry to sacrifice its independent status but this has done little to dampen chief executive Andrew Fisher’s enthusiasm for the reforms and his optimism for 2013.
Fisher said falling under the Financial Services Authority’s (FSA) definition of ‘restricted’ would not affect the advice Towry offered. Its advice would remain impartial, with its advisers being paid a salary rather than relying on product sales.
‘I am a strong advocate of impartial advice, which means the client pays for the advice themselves, and the person giving advice is salaried and acting in the interest of the client. That hasn’t changed, ’ he said.
Product sales dependence
Salaries are a topic close to Fisher’s heart and he had words of warning for advisers who depended on product sales for a pay cheque.
‘One area that is going to be really interesting this year is how much the adviser gets paid if the client doesn’t buy the product,’ he said. ‘If the answer is nothing at all, then I cannot see how the advice is impartial or suitable because by definition the person is just being sold a product.
‘This [model] is almost ubiquitous. I have looked at lots of firms that are becoming RDR-compliant and that piece of the jigsaw has escaped them. They have to adapt and change as it is not a sensible way to do business. If you can only get paid by selling something, then that is going back to the commission model but by another name,’ he said.
Refusing to recommend structured products
Fisher has been a long-term vocal supporter of the RDR and, while he is keen for advisers to push beyond it by becoming chartered or certified, he believes the new definition of independence will be difficult for firms to attain.
‘I think the independence hurdle is incredibly complex, quite high and difficult,’ he said.
One reason why Towry took the restricted route was it did not like recommending structured products. ‘We don’t particularly like most structured products and we don’t want to create a department of people who will spend their time analysing products we don’t think are appropriate for our clients,’ said Fisher.
Three-pronged expansion plan
Besides regulation, Fisher said he was looking forward to putting to good use Towry’s £35 million funds from new investors, including AlpInvest Partners and Honeywell Capital Management.
Towry plans to use the money for a three-pronged expansion project that includes hiring individual advisers and acquiring both small and larger businesses.
‘We want to acquire one or two larger firms, either because their parents want to exit this market because it’s too hard or because they believe they don’t have the strategic scale but have really great people and clients,’ said Fisher.
The long process of changing perceptions
While the RDR deadline has passed and may yet present his firm with acquisition opportunities, Fisher said the job of shifting the public’s perception of financial advice had only just begun.
‘We have a lot of work to do to rebuild the industry and rebuild trust; you don’t do that overnight. We’ve made a good start: the focus on transparency and the focus on fees mean internally we’ve done the right thing. Now we need to work externally and tell people [about it], which will take years,’ he said.
2006-present Towry, chief executive
2004-2006 John Scott & Partners, chairman and chief executive
2004-2005 Cox Insurance Holdings, chief executive
2003-2004 Card Protection Plan, chief executive
2002-2003 The Carlyle Group, senior adviser
2000-2002 Coutts, chief executive