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Tisa and Raymond James call for US pact on client ownership

Tisa and Raymond James call for US pact on client ownership

The Tax Incentivised Savings Association (Tisa) and Raymond James have called for the UK to adopt a US style agreement in a bid to achieve industry wide consensus on client ownership.

Tisa has already set up a working party, headed by Raymond James head of business development David Hazelton, in a bid to achieve a standard restrictive covenant in adviser contracts outlining when they can and cannot deal with clients after leaving a firm.

The body has lent its support to a proposal by Raymond James to adopt an agreement already used in the US called the Broker Recruitment Protocol whereby firms forgo any clauses restricting client adviser-client contact and the wishes of the client are made the primary consideration.

The Broker Recruitment Protocol was launched in 2004 in the US to protect the client’s interest of privacy and freedom of choice when their financial adviser or wealth manager moved firms.

Tisa designate chairman, Tony Solway, said the body was planning to send the US protocol around to IFAs to canvas opinion on its popularity in the UK and test whether it could be adopted by the UK’s financial services industry.

Michael Alford, deputy general counsel at Raymond James Financial, said that in the US 826 firms had signed up to the protocol, which had helped lower the cost of legal fees for firms by between 70% and 80%.

‘The Protocol represents a compromise solution to what has been for many years a vexing and expensive dilemma for US broker dealers, namely how to retain client goodwill and business in the midst of advisor transitions,’ he said.

He said that firms of all sizes had signed up to the protocol including large firms like Merrill Lynch, Smith Barney and UBS Financial Services in addition to smaller regional firms.

Keith Richards, Tenet distribution and development director, said he would support a push for an industry wide agreement on client ownership from a consumer perspective especially as it was in line with the principles of the retail distribution review (RDR).

‘From a consumer perspective if the adviser is key to giving that advise then actually we should have a protocol in place that doesn’t unfairly disadvantage the consumer over some dispute because the contract isn’t clear and concise,’ he said.

Towry chief executive Andrew Fisher, who was also speaking at the Tisa briefing on client ownership, dismissed a protocol and said that a consensus on restrictive covenants would be impossible.

‘One of the issues that we have is often clients do not know what they need and they don’t understand what they need so there always is a grey area. I don’t think a protocol is going to work; particularly given there are many holes. ‘

Fisher said that there is a large difference between the protocol of a large financial planning firm and a two-man band where one adviser is leaving.

‘To have a protocol that transcends a firm that has over 750 people and that advises 750 sole traders—I think it’s going to be impossible to meet those different client needs.’

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