Aviva in the UK has introduced a clause in their agreement with IFAs which effectively means the company can take back a client who they deem to have been 'orphaned' by their financial adviser. This is a move that product providers here are likely to take quite a long hard look at.
Although our distribution environment is undoubtedly different, the question will be asked - how different? Couldn't this work in New Zealand as well.
Product providers are annoyed by advisers behaviour in two areas of client servicing. One is the extent and frequency of servicing contact. A significant number of clients calling to cancel life companies say that since taking out the policy they have never heard from the adviser. The other is the suspicion that advisers 'churn' their client bases. I don't believe there is evidence of this as a widespread practice, but the suspicion remains behind grumbling about 'client ownership' - a detestable phrase as all it really means is a commitment to pay a renewal commission and an agreement around marketing.
There is likely to be a third, and arguably more powerful driver, for such a change coming soon. One part of the Aviva clause deems the client orphaned if they can no longer service the client due to losing their authorisation with the regulator (the FSA in the UK). Here is the excerpt from the Money Marketing article:
The clause defines an orphan customer as a customer who at any time
after being introduced by an adviser has requested Aviva to provide
financial advice, indicated to the provider that he or she no longer
receives financial advice from their adviser or can no longer receive
advice from their adviser because their adviser is no longer authorised
by the FSA.
The clause allows Aviva to initiate direct contact
with customers in order to promote and sell business without advisers’
consent where it conducts “generic marketing”.
The document
states: “We will endeavor not to initiate contact directly with
customers in order to promote and sell business without your consent
except in circumstances where in our reasonable view the customer is an
orphan customer.”
Read the whole article - link.