Damian Fantato  

Tug-of-war between providers and advisers

Damian Fantato

Damian Fantato

Unless you are a football fan, the name Jean-Marc Bosman probably means very little to you.

He was a Belgian footballer who achieved very little on the pitch but whose name will forever be associated with a revolution in football.

The Bosman court ruling of 1995 allowed footballers to move freely, without a transfer fee, to another club of their choosing when their contract with their existing club expired.

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Mr Bosman had launched a legal challenge to move from RFC Liege to USL Dunkerque.

This story carries some relevance for advisers because of its effects: the ruling led to the rise of the football agent and so spiralling transfer fees.

In recent months the Financial Conduct Authority has proposed two changes that will have an impact on clients being poached from advisers: the first is the requirement for platforms to check on orphaned clients.

The second is the proposals on investment pathways, which require providers to consider clients as non-advised if 12 months has passed since their last advised transaction.

The FCA should be cautious about inducing competition between providers and advisers for the client’s signature.

Obviously advisers will be loath to see their clients poached by an advice company owned by a large vertically integrated business, but clients are unlikely to be well-served if they are part of a game of tug-of-war between several companies – particularly given how many flaunt their growing assets under advice.

Ultimately the incentive should be placed on the client to shop around, not on companies to nab each other’s customers.