CompaniesJan 15 2015

The Moore’s the merrier

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The Moore’s the merrier

In 2009, seven advisers from Edward Jones who had been taken on by Towry, left for Raymond James. They wanted to take their clients with them, only for Towry to object, and it ended up suing both the advisers and Raymond James. In the end, Raymond James and the advisers won.

The case revolved around the concept of non-solicitation clauses and non-dealing clauses; Edward Jones contracts contained the former while Towry contracts the latter. The judge concluded that the two were not the same and that non-dealing clauses were not industry standard.

The consequences are still rolling on, according to Peter Moores, chief executive of Raymond James.

Apparently, more and more non-dealing clauses are being inserted into advisers’ contracts to prevent them from taking their clients with them.

He said: “As a consequence of the case there have been more firms changing their non-solicitation clauses to non-dealing – an adviser will say, ‘I have a clause in my contact that says I’m not allowed to deal with you’. You can’t deal with him for 12 months.”

“Non-solicitation is if you were my former client I wouldn’t be soliciting your business if you left the firm, but you’re allowed to come to me and do business with me.”

However, two years on from the case, it seems its main instigator may be relenting even on that. Mr Moores said that he had someone join him from Towry who had a non-dealing clause in their contract, but a client from Towry wanted to keep using him as his adviser.

The client in the end wrote to Towry, asking for it to be repealed, and the company relented, according to Mr Moores.

Mr Moores said: “Towry waived non-dealing clauses for some clients, but why should the client go through that step? It’s a difficult process to go through for a customer.”

Despite the drama of being involved in the court case, Mr Moores is perhaps surprisingly neutral about Towry’s motivations

Mr Moores understandably objects to these clauses completely. He said: “If the customer decides they want to stay with the adviser, are you really going to be able to prevent that, or will you disrupt the customer for the next 12 months?

“We have 6,200 wealth managers in the whole group, and they have no non-dealing restrictions, but we’re able to retain and attract clients. Some people say we have to work harder because investment managers could walk at any time.”

Despite the drama of being involved in the court case, Mr Moores is perhaps surprisingly neutral about Towry’s motivations for taking action in the first place.

He said: “They wanted to protect their business. They had just bought this business and were concerned that assets would walk out the door. That was the only reason behind it. They wanted to protect it – they may have believed that non-solicitation and non-dealing were the same.”

Mr Moores does not automatically attribute Raymond James’ success in court directly to a large increase in adviser numbers at the company – in the 12 months to end of September the company recruited 19 new advisers, comprising five branches and five businesses opting for Raymond James’ wrap option.

However, Mr Moores said that the consequences of the case meant that the world knew that the company’s advisers follow due process. He said: “We want people working for us who follow their contractual obligations. We’ve had no litigation since then.”

Mr Moores has been at the helm of the business in the UK for 10 years, after the US parent set up shop in Europe 27 years ago.

He began his career at what was then Chase Manhattan Bank, starting out on the financial analyst and associate development programme. He spent 10 years at the bank, becoming regional sales director Europe, before becoming head of corporate development at DAB bank, and then chief executive of Selftrade.

He became chief executive of Raymond James Financial in the UK in 2004.

The company works on a slightly unusual model, in that all its advisers are self-employed but work under the Raymond James banner. It has three different models for advisers who want to join: they can open a branch of Raymond James, offer a discretionary service without changing their permissions or use the wrap for mid and back-office functions.

Mr Moores said: “Regulatory-wise, they are Raymond James; from a client’s perspective, the suitability standards are the same. The wealth managers are responsible for their losses if they give bad advice – we step in first to supervise it accordingly. They can’t walk away from a problem.”

The retail distribution review did not especially affect the company, particularly on the wrap, as the company was mainly using clean share classes. Mr Moores said: “In the situation where we did invest in trail-paying classes we rebated the trail back to the client. We were rebating trail from the early days – for us it made no commercial difference.”

The company does not offer its own products or have special deals with providers. Mr Moores said. “We are commercially independent and product and service agnostic. We have no financial incentive – we don’t charge shelf space for fund groups,” he continued.

But perhaps Mr Moores’ real legacy will be staking a claim for ownership of one’s clients. Despite the proliferation of non-dealing clauses, and whether or not Towry is relenting on them, Mr Moores insists it is better if the adviser owns the client.

He said: “If I can take my client bank with me, I’m not thinking about how much money I can make, I’m thinking about the lifetime of the client.”

Melanie Tringham is features editor of Financial Adviser

2004 to present: Chief executive, Raymond James UK

2002-2004 Chief executive Selftrade (UK)

1999-2002 Head of corporate development, DAB Bank, (Munich Germany)

1989 - 1999 Vice President, JP Morgan Chase, (London, Frankfurt and New York)