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Towry sees no conflict in bonus for in-house deals

Towry Law says there is no conflict of interest in offering advisers incentives to recommend its in-house discretionary investment management service to clients.

Last week, The Times newspaper revealed details of a contract being offered to a prospective Towry Law adviser including bonuses depending on how much money they put into Towry’s Independent Investment Management service.

Head of strategic marketing David Middleton says Towry Law is offering bonuses to former Edward Jones’ advisers as part of their employment contract to switch clients to the Towry Law service.

Middleton refused to give details regarding the size of the bonuses, saying they are confidential agreements between Towry Law and its employees.

He says: “We passionately believe that our discretionary investment management service is better than the service that was offered by Edward Jones.

“We want to encourage our advisers to have that conversation with clients. We want them to prioritise that conversation because we think it is an important new service that former Edward Jones’ advisers have to offer to our clients. One way of encouraging people to prioritise that discussion is to reward them.”

But Middleton insists that this does not result in conflicts of interest.

He says: “The fact is that the vast majority of our clients are based in the UK and are sterling thinkers and if they have a pool of money to be managed it is highly likely that an independent discretionary investment management service is going to be something that is appropriate to their needs. There is no concern there is a conflict of interest there.”

Middleton says Towry Law’s best-performing strategy last year returned 20 per cent compared with a 22 per cent return from the FTSE 100.
Independent consultant Stan Kirk says: “For all intents and purposes, Towry Law has become a provider pushing its own products. I do not see that as a negative thing, they have just created efficiencies in their service.”


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. “One way of encouraging people to prioritise that discussion is to reward them.”
    Sounds like one of those enhanced commission deals life companies were so keen to promote to me …
    Mr Middleton can believe that the TL portfolio is (a) better than the EJ offering and (b) the best thing since sliced bread, but if it’s that good then surely any adviser worth their salt would use it – in fact, every IFA should be an introducer to the TL funds … can Mr Middleton send me details please so that I can make sure my clients find out about this fantastic investment opportunity??

  2. “Independent Investment Management service” ~ independent of what? If it isn’t recommended on the basis of being demonstrably better than any comparable portfolio management service from the rest of the market, then it isn’t independent. Is it? Still less if TL’s advisers are offered greater incentives to recommend TL’s own funds than any others available in the open market. The whole set up seems to make a mockery of any claims on the part of TL of being independent financial advisers.

  3. Nothing wrong with it at all, as long as they dont purport to be “independent” ..coz whatever the various views are about what the term independent might mean, I’m pretty sure that clients think it means you arent biased towards your own products or services. ..and doesnt TCF outcome 3 mean clients ought to have it made clear that there is a finanical bias towards the specific recommendation?

  4. When John Scott & Partners (now part of TL) bought the well respected Scottish IFA, Aitchison & Colegrave, they couldn’t get the money into their own IM side quick enough! Nothing has changed except it is a bigger money generator for them. Not much work required by the I(??)FA then – just the topping up of an internal cash pile!

  5. Certainly IIM means the Towry advisers can’t call themselves Independent, which is one reason I didn’t accept their offer of employment. Funds are also performing poorly against market, and clients asked to pay about 3% pa for those with less than £200k to invest for the “service”. That’s equivalent to churning portfolio every year! Not suited to most clients and really can’t see how Towry Law get away with it.

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