The director of relationship management and business support at national advisory firm Raymond James said non-dealing clauses are “simply not in the best interests of investors”, calling for investors to be allowed to move their portfolios along with their wealth manager should they leave a firm.
Ms Poole said: “Clients should be able to choose who they deal with and, in fact, investors are typically not even aware of the existence of these restrictive covenants until their wealth manager leaves a firm.
“In this situation, an investor should have the option and the ability to move their portfolios along with their wealth manager, safe in the knowledge that they can continue to work with someone who understands their needs and history.”
Ms Poole’s comments followed a client opinion survey conducted by the firm, which found that 92 per cent of investors prioritised personal relationships, while only 14 per cent of investors place importance on a recognisable brand.
In February 2012, national IFA firm Towry failed in its £5.8m damages claim against seven former Edward Jones advisers and Raymond James, who were accused of ‘poaching’ clients.
The 362-page judgement handed down by Mrs Justice Cox at the high court decided that the seven former Edward Jones advisers had not in fact solicited clients, saying that the reason for the defection of clients from Towry to Raymond James was due to the client/adviser relationship.
Adviser view
Susan Hill, chartered financial planner at at Hertfordshire-based Susan Hill Financial Planning, said: “I wonder whether there will be a future for restricted covenants once we fully move to a world of fee-based advice, where adviser remuneration will be much more clearly defined for clients.”
