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House style

Nic Cicutti

It is with interest that I read in The Times newspaper that Towry Law is “encouraging its advisers to recommend its in-house investment schemes” by offering them financial incentives to do so.

The paper says, a former Edward Jones adviser was offered a contract of employment with Towry Law which included bonuses for attracting money into that company’s Independent Investment Management service.

Towry Law’s chief executive Andrew Fisher believes the practice can help rebalance a client’s portfolio without add- itional costs, including capital gains tax bills.

“The structure offers huge diversification, risk management and portfolio construction advantages over a typical private client share portfolio,” Mr Fisher is reported as saying.

I have Towry Law’s IIM proposition to prospective clients. In it, we are told that diversification is important, as was evident in 2008 when stockmarkets plunged but gold and global government bonds soared. “By investing in a wide range of investments and Government bonds, we ensured that our clients did not suffer like those who had invested most of their money in equities,” the eight-page brochure says.

This is demonstrated by a chart which shows the relative performance of the Gold Index and the World Government Bond index against the FTSE All Share. Some people might have preferred to know how Towry Law’s own IIM service performed over that same period but would-be clients are told that such figures are available on request.

In any event, last week’s Money Marketing reported that Towry Law’s best-performing strategy last year delivered 20 per cent compared with a 22 per cent return from the FTSE 100. It was not clear whether this includes reinvested dividends.

In response to The Times’ questioning as to why Towry Law’s IFAs need an additional financial incentive to promote the IIM service, Mr Fisher says: “I don’t believe that an individual adviser can monitor and choose a manager out of the 5,000 on offer. It provides an incentive to encourage people to understand the best way to manage money.”

The company tells prospective clients on its website: “We encourage all employees to develop their technical knowledge through examinations and continuing professional development, as this produces a more professional service for our clients. This is backed up by support from a centralised technical department where our consultants can call on experts in complex areas such as tax mitigation, trusts and pensions.”

If the company’s IIM service is the right one for their clients’ needs, it raises the striking possibility of other IFAs recommending the IIM service to their clients.

Indeed, on Money Marketing’s website, the redoubtable fee-based planner Gill Cardy certainly raises this potential option, perhaps tongue-in-cheek, asking for more details “so that I can make sure my clients find out about this fantastic invest- ment opportunity”.

That sounds like a good story. If so, Mr Fisher needs to shout it from the rooftops.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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