It is sometimes said that when wealth management firms grow larger they become impersonal. But at Towry, the UK wealth advisor, its managers challenge the idea that big cannot be friendly.

Towry – the firm formerly known as Towry Law – says it is one of the largest pure-play wealth advisory businesses in the UK, with 21 offices, 208 advisors (out of a total payroll of 773 employees) and more than 20,000 clients. To be a client, the firm requires a minimum of £100,000 (around $164,400) of investable assets.

The firm has grown through a mix of organic growth and acquisitions – most recently purchasing advisory firm Edward Jones in 2009. (There has been controversy: Towry is in court proceedings seeking damages from seven former Edward Jones advisors and their current employer, Raymond James Investment Services, over alleged client-poaching. That case in the High Court continues and is expected to be concluded later this year).

Two of Towry’s top managers, David Middleton and Matt Pitcher, told WealthBriefing recently that the firm can continue to grow strongly without hitting any capacity or client relationship difficulties. Middleton is head of client proposition while Pitcher is a senior client partner and a chartered financial planner.

"We hope to continue to grow the business, maybe with the opportunity for us to make some further acquisitions if the market consolidates. Regulatory and other changes make our business model competitive," Middleton said in an interview at Towry’s smart premises off New Fetter Lane, an area bordering the legal, media and financial districts of London.

Middleton said he did not believe that a larger firm necessarily meant any diminution of the personal touch in terms of client service.

"I don't think large size means 'impersonal'. What the private client wants in our view is that they definitely want personal relationships and to know that behind a relationship manager, there is an infrastructure to support them,” he said.

"It is not possible for a 'one man band' to know everything about investment management - estate planning, lifetime financial planning, tax, and to be responsible for implementing all this and to be on top of announcements from the FSA [Financial Services Authority] and how he should count the beans to see if the firm is adequately capitalised."

His argument touches on a continuing debate about what sort of business model works best for people seeking financial advice: the small boutique, medium-sized player, or “one-bank” model with global reach and an army of experts on tap. As Middleton’s comments suggest, there is a balance to be struck between getting the “human touch” right and being able to master a wide array of disciplines. And the debate comes at a time when, according to consultants, cost pressures are more intense than in years. The average cost-income ratio for wealth managers worldwide is at a record level of just under 80 per cent (source: Scorpio Partnership).

Towry's own numbers give reason for some satisfaction: in 2010, its earnings before interest, depreciation, tax and amortisation were £16.1 million, a jump of 56 per cent on the previous year. The firm oversees a total of £4.239 billion of client money.

There’s no such thing as a free lunch

As Middleton and Pitcher pointed out, the industry is being shaped by the forthcoming Retail Distribution Review of the FSA (due to kick in by the start of 2013). Towry is ready and prepared for this shift, with its ban on commissions and promotion of a fee-based remuneration model. This is a model that Towry has adopted for many years, they say.

"Advice has never been free - clients have always paid for it one way or another although it has been dressed up as being free," said Middleton. "The threshold of qualifications that people have had to give advice has traditionally been too low but now they are going higher," he said.

Pitcher argued that resistance among potential clients to paying fees was not so much a cultural as an educational issue, since people soon understand the issues once the economics is explained. "You cannot advise a client properly on a commission model; for example, clearing debts and keeping money in cash, as pieces of advice, means that you don't get paid,” he said.

The origins of Towry's fee model go back to when the business was purchased in 2006 (it was then called Towry Law) by John Scott Partners, a business that had operated on a fee model since the 1990s.

"We had to take on all the Towry Law clients and said, 'This is our business model', and with hardly any exception, they said, 'Great',” said Pitcher.

Market segment

Towry takes on clients in a range of having between £100,000 to £5 million of investable assets, although it will work for clients with more or less, such as the children of clients. "Our typical client has investment assets of between half a million to three quarters of a million; they are typically 60 years old or above, but increasingly, we get people aged 45 and above," said Middleton.

"A big trigger point [for bringing in younger clients] is pre-retirement, where people ask: `What should I do?' Increasingly people are coming to us in that 45+ age range saying they need some help,” said Middleton.

“We also have a niche in specific client types: we are an accredited firm with Camelot [which runs the UK National Lottery] so we get introduced to lottery winners," he continued. The firm also has a business line advising people who receive payouts in personal and clinical negligence cases.