Raymond James has called for a US-style protocol between adviser firms to avoid time-wasting and expensive legal battles over client ownership when advisers change companies.
Mike Alford, deputy general counsel at Raymond James Financial, today (30 May) spoke to UK adviser firms about the benefits of allowing clients the freedom to follow their advisers from firm to firm.
Visiting from the United States, Mr Alford spoke at the Tax Incentivised Savings Association conference titled When advisers leave, who owns the clients?
In his speech, Mr Alford explained to the audience how battles over client retention grew to impractical levels in the United States.
He said: “Most firms were consistently inconsistent in their positions depending on whether they were hiring or losing the advisers at issue.
“This produced the curious result of many firms being on both sides of recruiting litigation, often simultaneously.
“As you might imagine it can be difficult for firms to successfully prosecute cases when the defence is able to demonstrate that the complaining firm is often engaged in the same or similar conduct when recruiting advisers on its own behalf.”
In the United States, 826 adviser firms have signed on the the Broker Recruitment Protocol, an agreement launched in 2004 in which members agree to forego the enforcement of restrictive covenants such as non-dealing clauses.
The aim of the protocol is to keep the clients’ interest squarely in focus, ensuring the client has the choice of whether to follow their adviser or stay with the original firm.
Raymond James this year emerged victorious from a legal battle with Towry, in which the latter accused the former of poaching clients when seven Edward Jones advisers joined Raymond James after their company was taken over by Towry.
Towry chief executive Andrew Fisher also presented at the conference.
