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Does Towry deal threaten Ashcourt Rowan advisers’ independence?

Ashcourt Rowan’s status as a fully independent advice business could be under threat after Towry revealed plans to buy the firm.

On Monday, Towry set out details of a proposed £97m deal that has already been approved by Ashcourt Rowan’s board.

Ashcourt Rowan chief executive Jonathan Polin will leave the firm if the shareholders take up the £2.70 and 5p loan note per share offer that still needs regulatory and High Court approval.

The former Ignis boss says it is a “great result” for the team to turn the business around from a share price of £1 when he took over in September 2011 to £2.70 today.

He also stands to make a large slug of cash from the deal, which should be finalised in three months. Polin will receive £625,000 from the sale of his 0.65 per cent stake in Ashcourt Rowan along with severance pay, netting him a total of £4.4m.

Towry chief executive Rob Devey, who replaced Andrew Fisher in April, says he cannot say whether Ashcourt Rowan will remain independent.

“To be honest we have no real view on that at the moment,” he says. “The way we do things at Towry is a pretty open restricted [model] and we’re further extending what we’re doing.

“We genuinely can’t say at this stage but Towry is becoming progressively more open, I can say that.

“We cover a massive part of the market in terms of what we do here, but we are quite conservative so when we had to make a choice we went with restricted.”

The integration of Ashcourt Rowan and Towry will broaden the range of promoted investments offered by the group, he says. 

A single-brand is planned for the two businesses, he says. A review of the businesses and how they will integrate is on the cards after the deal is inked and redundancies are likely. 

“It is too early to say which brand is the best to take forward,” Devey says.

He expects to see the slew of mergers and acquisitions continue this year.

“It’s quite costly to run a firm of financial planners and wealth managers and if we can spread that cost over more clients and colleagues that’s going to make a better outcome,” Devey says.

“There are great advisers and firms out there thinking about their futures.”

With so much rationalisation in the industry, Devey says he is unconcerned about Towry being taken over.

“I’m not worried about it. My interests are to clients, colleagues and shareholders.”

He “would not rule anything out” and says he would have conversations with any firm.

Ashcourt Rowan provides wealth management and employee benefit consultancy services, and manages or has influence over £5bn in assets, of which £2.3bn is on a discretionary or managed basis. The firm has 340 staff and 16 offices in the UK.

Towry manages £6bn in assets and has 22,000 clients. It has around 800 employees from a national network of 20 offices.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. A “single-brand for the two businesses”, sounds very much as though either Ashcourt Rowan will have to conform to TL’s restricted model or, rather less likely I think, that TL will revert to WoM independent status. Are not the FSA/FCA’s ludicrously onerous criteria for the latter exactly why TL (like so many other firms) have switched to restricted? Given that reverting to independent status would make it very much harder for TL to justify shovelling all and sundry into its own funds, how likely is TL to want to do that?

    Then again, there’d undoubtedly be problems trying to run two businesses, one restricted and the other independent, under the same banner because TL would surely be obliged to explain to clients the differences between them. The primary difference would be that TL’s independent arm would provide a much more comprehensive range of investment funds and products but (inevitably) at much higher cost and with all the potential compliance headaches that post-RDR independence bring with it. Tricky.

  2. The headlines are always about how much the chosen few pocket from the deals and the size of the new empires, in my personal experience the footsoldiers and clients rarely benefit despite all this ” corporate speak ” about synergies, economies of scale etc.

    More than likely there will be job losses, and clients moved from perfectly suitable contracts to meet AUM targets, with incentives to do so.

  3. Hypothetically, imagine the shareholders putting up the cash, and the FCA, asking what the new brand is going to be going forward and is it going to be independent. The answer appears to be, respectively:

    “It is too early to say which brand is the best to take forward” and “To be honest we have no real view on that at the moment”.

    I feel sure the reply might go something like, “OK, sounds like a plan, here’s £97M and good luck with the takeover…”

  4. “My interests are to clients, colleagues and shareholders….”

    Rearrange into any order you like…with the exception of the client who sadly will not be first or second!

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