IFAs have attacked Edward Jones for its door to door sales practices branding them outdated and unfair to customers.
EJ defends its approach, suggesting as a branch-based investment adviser firm, it needs to get to know its clientele on a more personal level and says it has conducted extensive research that supports its decision.
It claims when it came to the UK a decade ago, it went to great lengths to ensure its practices were within the boundaries of the regulator.
But some IFAs have taken issue with its approach. Edward Jones’ door-knocking tactic has been called “prehistoric” and one adviser said any clients accepting advice from someone who knocks on their door is getting the advice they deserve.
EJ says it is a branch-based model and representatives approaching potentially suitable candidates for advice at home is better than cold calling at random.
Principal (products and marketing) Rob Boyd says there is nothing wrong with an EJ colleague going to someone’s house, introducing their services and leaving a business card, saying it is not as though they are flogging particular products.
It is not only IFAs who seem slightly confused over whether this approach is acceptable.
The first reaction from the FSA was that door-knocking, which comes under the financial promotions rules of investment business, was only allowed if an existing relationship was in place.
But further investigation revealed it was in fact allowed providing the products being pushed were generally marketed packaged products and that there was no gearing involved.
EJ says it would steer clear of any geared products or any investment product prone to high volatility, so it was sure it was operating within the confines of the regulator. It defines its target audience as cautious but long-term investors looking for a conservative investment vehicle.
But many advisers are finding it hard to believe that if door-knocking is banned for mortgage advisers, how can the FSA permit door-to-door sales of investment products?
Although there are plenty that see these door stepping tactics as potentially damaging to the industry, Edward Jones is still growing in the UK using this business model.
Perhaps the next stage will follow the footsteps of Ann Summers or Tupperware, with advisers hosting parties to cross-sell the latest line in bonds or discuss the latest specialist mortgage rate.
Nothing would surprise me in this industry, but although I can think of numerous other parties I would sooner spend my Friday night at, I cannot speak for all of the adviser community.