Towry Digests Ashcourt Rowan

by | Jul 28, 2015

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Towry Office

Choosing the right exit strategy is probably the biggest decision an IFA will ever have to make. In this, the second of a series of features, IFA Magazine looks at what some leading firms are offering advisors who want to retire. Neil Martin talks to Andy Cowan, Head of Private Client at Towry Limited.

Having just acquired Ashcourt Rowan, it’s fair to say that Towry has had its hands full of late. That’s not to say that Andy Cowan, who looks after acquiring IFAs for Towry, has closed the door to new advisers, or to firms.

But for the next few months at least, he thinks that what Towry is after are individuals with businesses which would be really easy to integrate into the Towry model. Cowan cites one example recently of a one-man-band IFA who was able to walk right into the Glasgow office and, because he was such a good fit, effectively started work from day one.

So what’s a small business? “I mean anything from one guy to maybe 20 advisers. Anything in that spectrum we would see as a relatively small firm – and we are potentially interested actually in all of them, and really interested where there is the right talent.”


The Consolidation Imperative

What Cowan notices is that, without question, even small firms are favouring operating on a larger scale these days. And they welcome the chance to drive down costs through greater efficiencies. Add to that the recent changes in technology, and he thinks we have a dramatically changing environment for the smaller firms.

Those small firms who are not thinking about selling their entire businesses, says Cowan, may have a different plan in mind: “They are looking at outsourcing more of what they do – so that could be investment platforms or investment management services, or CRM systems, or even compliance.”

How can they manage the transition? “They could join a network of advisers, of course – maybe not quite as popular now – but with the idea being to pool resources, but to also maintain a profile of their own business above the door.”


Another option for firms, says Cowan, is to consider using a consolidator, which has the attraction of having a greater degree of central control and support but still allows them their own identity within a franchise.

A Different Approach

Towry’s approach and sales pitch for those firms joining the fold is different. “Our vision is to be a scaled national brand,” he says, “where consistency is a really important part of that brand.”

“Our argument to small firms is that if you join us either as a practitioner with a long term career ahead of you, or even as someone who might only be looking for a couple of years to reallocate his client book and then retire off into the sunset, or whatever, we are a really good place to be. And here’s why: we have a huge amount of central support.”


“Before the Ashcourt Rowan deal we had about 180 advisers, but now it’s about 240. And we also have around 70 paraplanners who write reports for advisers, and about 90 client service administrators.”

The objective for Towry is to get the IFA spending as much time with his clients as possible, and not to get tied down in the back-end administrative processes.

Does Towry insist that the IFA stays around after the deal? “Not exclusively so,” says Cowan. ”But generally it’s true, and the reason it’s true is because of the huge importance and value that we place on the [existing] relationship between the adviser and their clients.”


Towry are happy to welcome a wide range of advisers, as long as the clients are put first in any deal. “An adviser who might be into his late 50s, early 60s, might want to stick around on a really good package, with the knowledge that there’s a good career here for the next couple of years, and simply talk to his clients. Then gradually we will involve other longer standing advisers, so as to securely integrate the client into Towry.”

Then again, admits Cowan, they also had an adviser who just wanted to hand over his clients – and, because they were a good fit, Towry did the deal. The adviser got his cheque and withdrew.

What’s the Business Worth?

As for what Towry is prepared to pay, it all does depend on the individual involved, the client list – and of course whether the adviser is looking to build a career, oversee a lengthy transition, or head off for the beach. In the case of the latter, payment would usually be spread over a number of years and still involves a detailed transition.


Cowan is clear on what Towry is prepared to offer. “It really is bespoke, we don’t have a formulaic approach to this. What we’re really asking is, what is the value of this business to Towry? It’s not a question of the intrinsic value, nor the market value, nor the floating value.”

“Where there are great synergies around the propositions and methodology, etcetera, there might be huge value to Towry – in which case we would be prepared to pay more than what would be deemed the market price. And other occasions where there is less value to Towry and we’d pay less.”

What sorts of formulas are applied? It can vary from 2% to 3% of assets under influence, he says, or it might be five or six times the profit number. Or three to four times the turnover figure.


Unsurprisingly, Cowan says, they always think that they are worth an awful lot more. “But we explain the rationale behind the pricing, and in some cases we do pay very well if the book of clients looks very similar to our kind of sweet spot.”

And that sweet spot, says Cowan, is where they find that they are able to deliver most value to the new clients.

As for the client profile, Towry looks for “…middle market clients…” which are not those with less than £100,000 investable assets, but probably with between £250,000 and £1m.”

The Current Situation

Asked whether Cowan thinks the ‘market’ for selling, or retiring IFAs is competitive at the moment, he gives an honest answer. “I’m not really sure that’s true. I know that businesses are very often quite attractive, but how many firms, without blowing our trumpet too much, are in our position? We are a pretty strong firm, with a pretty strong balance sheet, plenty of cash, very profitable, and we can pay well for these businesses. How many other firms are in that fortunate position?”

“Our younger advisers have a great career path, and the framework to support them. We are a very attractive proposition, we are keen to grow, and know that it’s all about people.

“Just because there are issues in the sector and people are struggling with regulation and other issues, it doesn’t mean to say that it’s not brimming with talent.”

Towry IFA Retirement Offer – At a Glance
  • Towry are quite particular about who they are looking for
  • Can handle very large firms as well one-man-band deals
  • Vision is to be a national brand with a comprehensive proposition
  • IFAs are preferred who can seek a career path within Towry, or at least facilitate a smooth client transition into Towry
  • Towry needs to see synergy with advisers’ clients
  • ”We are very happy to talk with businesses where we recognise a strong cultural fit.”

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