Towry creates default fund to help staff spread investment risk

Wealth management firm Towry chose to create its own default fund for employees in its group personal pension plan.

The organisation has mirrored the risk profile-based investment approach that it offers to private clients when looking at retirement planning for its own staff. The strategy is a mix of different asset classes.

The lifestyle investment strategy Towry created is a blend of a growth-based and a managed approach, a bond fund and a cash fund.

Of its 700 employees, about 93% are in the default fund, the Towry investment strategy.

Richard Higginson, head of reward at Towry, says that when the organisation switched pension providers in 2009, from Axa Wealth to Zurich Life UK, it looked closely at what default funds were on offer from different providers and, rather than choosing a standard fund, it decided to create its own using multiple funds to ensure an optimum blend of risk for staff.

Higginson says: “It’s a strategy with which our wealth advisers are very familiar because they are explaining it to our clients. For the rest of our employees, we explain it to them, but rather than just talking about making pots of money, we discuss their attitude to risk and [the importance of] trying to spread risk by having a default fund that invests in lots of different things, rather than putting all their eggs in one basket.”