Towry's High Court defeat has thrust employed advisers' contracts - and any caveats written into the small print - firmly into the spotlight.
Professional Adviser asked a number of industry stakeholders for their take on restrictive covenants...
Dante Peters, director, Magus Financial Planning
"The bottom line is that, if the client likes their adviser who then leaves his company, and the client wants to go with them, then so be it. Non-dealing clauses are absolutely crazy and the client should be able to deal with whoever they want to. In our firm, we try to make sure the client does have a relationship with the firm, rather than just the adviser. If you want to keep clients when an adviser leaves, you need to make sure that's the case. However, we never say we own a client; they have chosen to work with us."
Jock Cassidy, managing director, Ashley Law
"The relationship is between the adviser and the client and if the adviser leaves us and wishes to take clients with them, as long as they get their consent, we don't enter into conflict. However, what does happen frequently is that when the adviser is leaving, they tend to forget to do these things. If they fail to communicate with the client, the client continues to be under the ownership of Ashley Law."
What does Towry's High Court defeat mean for employed advisers?
Kevin Tooze, managing director, Equity Partners
"Big companies do think the client buys the company, but of course they don't. They buy into the individual who goes to their home or meets them in the office and does everything for them. It's almost a naivety or arrogance that they think the clients will remain with them. My experience in leaving big companies is that 90% of the clients come with you. However, if a big company gives an IFA a job, I can understand them writing non-dealing clauses because they have to protect their position."
Fay Goddard, chief executive, Personal Finance Society
"When advisers join a firm on an employed contract quite often these clauses become more prescriptive. They should be extremely vigilant when they sign up to any contract. Provided they are fully aware of what they are signing up to then it's up to them to make that decision. However, I don't think non-solicitation agreements really work."
Adrian Pickersgill, director, Chatfield Private Client
"Two colleagues and I decided we wanted to set up our own company in early 2010. In the contract with our previous company there were no non-solicitation clauses or anything like that. However, we'd always promoted that business so whilst we had good relationship with the clients, we decided we weren't going to poach any. If they wanted to follow us, that would be fine, but we wanted to start almost from scratch."
Matthew Timmins, managing director, Simplybiz
"Non-dealing clauses are totally unfair and ultimately it should be up to the client who they have a relationship with. However, if you're in an organisation where you have centralised back office and platforms, you need to work out what relationship you've got with the client and how you'll manage it when you leave. If the only way to deal with the client is to stay in the organisation, you're trapped in there."
Championing diversity in the workplace
Our weekly heads-up for advisers