who owns the client if their adviser leaves

The issues around client ownership are tricky so it is more than just useful that Malcolm Small is wading through some of them to provide an industry protocol for when their adviser leaves the advisory firm.

who owns the client if their adviser leaves


One of the issues that we have recently been asked to address concerns adviser protocols, a project that is basically taking an in-depth look at the feasibility of adapting for the UK market pan-industry agreements that are used in the US to establish due process when individuals move between advisory firms, or one such firm acquires another. 

Standard process

Earlier this year TISA (Tax-Incentivised Savings Association) held a seminar – the theme was: ‘When advisers leave, who owns the client?’.

A sensible point was raised.  If the volume of litigation could decline so markedly in the US once adviser protocols had been introduced and widely adopted, could the same or similar standard procedures be applied in the UK?

Existing arrangements create uncertainty all round, for firms, advisers, product and service suppliers, but most importantly, potentially for clients.  Delegates at the seminar questioned the robustness and enforceability of non-solicitation and non-compete clauses currently contained in the agreements that many advisers have with their employers.  So even if the US model is found to be wholly inappropriate, one thing is clear – the status quo is ripe for improvement.

For this reason we have established an executive committee to drive the project with representation from a wide range of industry stakeholders.  As always, our high level objectives are simple and straightforward as we aim to establish clarity for clients and firms and to save the industry time and cost, in particular legal fees.

An obvious side benefit is that the industry’s reputation will potentially be saved the indignity of very public displays of internal feuding.  It is neither in the interests of clients nor the industry, if high-profile court cases are grabbing the headlines.

Avoid reputational damage

The complexity of issues arising when financial advisers move between firms, when one firm is purchased by another, or when an advisory business goes into administration cannot be underestimated. The difficult balance that needs to be achieved is on the one hand for clients to be able to maintain a relationship with the adviser they have grown to know and trust and on the other, for the commercial interests of advisory firms to be respected as they endeavour to secure their future income stream and build value into their business.

Essentially though, let us not forget that the RDR is designed specifically to give clients greater choice and a much bigger say in their future.  Clients have rights – amongst them, the right to deal with the person whose integrity and professionalism they value.



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