Towry Case Will Bring Adviser Contracts Under Scrutiny, Robert Campbell Tells MoneyMarketing

Wealth manager Towry's defeat in the case it brought against Raymond James and seven former Edward Jones advisers is likely to bring financial adviser contracts under heavy scrutiny, MoneyMarketing reports.

Towry's chief claim, dismissed by the High Court judge, was that the advisors, who moved to Raymond James after Edward Jones had been acquired by Towry, breached non-solicitation clauses in their contracts. The departing advisers were followed by 388 clients, who transferred £33 million in assets to Raymond James.

According to Robert Campbell, who represented Raymond James and the seven advisers, the judgment testifies to the strength of the relationship between clients and advisers.

"Towry said itself it was taken aback by the tidal wave of transfer requests that followed the [Edward Jones] acquisition," he said. "Firms cannot assume that just because they buy a client book that the clients are going to want to stay with them."

Campbell anticipates that financial adviser firms may look to impose tougher non-dealing clauses in the wake of the Towry case as the non-solicitation clause did not prevent the significant transfer of assets.

"Anybody who is drafting a contract of this nature in light of this judgment is going to be in no doubt that they will have to be very clear about what they want to achieve," he said.  "It is a bit of a wake-up call to the industry as a whole." Read more.