MM Leader: Focus on valued service rather than 'ownership'
Assessing the fallout from last week’s Towry/Raymond James court case, it is worth remembering that clients are not slaves that can be packaged up and sold at auction to the highest bidder.
As Ernst & Young director of financial services Malcolm Kerr points out in this week’s Money Marketing, you do not own clients, you earn them, and this remains true for as long as they want to continue to receive your advice.
Some commentary has focused on whether this judgment will lead to a rush of bigger firms looking to do more to “lock in” their advisers’ clients through tougher contracts, for instance, using non-dealing covenants rather than non-solicitation ones.
But this “firm first, client second” mentality is hardly an enlightened way of securing your future. Many clients would run a mile if they realised this was the way they were being thought of. It also ignores clients’ freedom to choose the type of service they require and the person they want to receive that advice from.
In a recent issue of Money Marketing, Informed Choice managing director Martin Bamford discussed the dilemmas for IFA firms looking to scale up their businesses.
He observed that although it is possible to scale up the marketing and processes behind the investment advice, it is far more difficult to scale the advice itself as it is centred on an individual, personal and usually face-to-face relationship.
It was the value clients attach to this personalised service which was underlined in last week’s verdict.
Writing in this week’s Money Marketing, lawyer Alex Denny, part of Raymond James’s legal team, questions where certain employer restrictions stand with regard to the FSA’s treating customer fairly requirements. He asks whether the regulator may look to address potential conflicts between employer and client interests.
An industry-standard code of conduct, of the type being proposed by the Tax Incentivised Savings Association, could be a positive move. It would be better if the industry can put its own house in order before any regulatory intervention.
Rather than looking to restrict client freedom, bigger firms should be focused on providing the type of service that advisers and their clients value and want to be part of. Last week’s verdict was a victory for the consumer against a restrictive agenda.