Is an “Investment Proposition” Intellectual Property?

Originally posted on AdviserLounge on 18th of February

 

I am always keen to see how advisory firms differentiate themselves from the competition. I read recently in one of the industry publications of a firm that suggests that what separates it from other firms is that they have a investment committee that meets quarterly!

Most of us will agree that having an investment committee that meets regularly IS NOT really a differentiator but it got me thinking; is an investment proposition intellectual property that needs to be guarded and legally protected? Is it even a it a trade secret?

First, while we as professionals know how important and time-consuming the investment process is, it is not something clients really place a lot of value on. I don’t mean that it’s not important, just that clients don’t choose one adviser over the other because one of them has a ‘robust investment process’.

 According to the Intellectual Property Office, at the very basic level, an IP results from the expression of an idea. So IP might be a brand, an invention, a design, a song or another intellectual creation. It can be owned, bought and sold. But can a firm claim legal ownership of their investment proposition? Is it patentable? Is it proprietary?

For starter, the academic evidence underpinning most investment propositions are out there for anyone to use (and reference of course.) While each firm will differ in how they interpret, organise and apply these, it will be very hard for a firm to claim exclusivity and stop others using it.

Take a situation where an adviser has been in Firm A for several years, and  leaves to join firm B or set up their own firm C, what stops them from taking the ideas with them? Unless they copy the process word-for-word, how does firm A prove that the proposition is theirs? 

Take another instance where Firm X gives Firm Y the ‘license’ to use its investment proposition, for a fee. If we ignore all the culture issues, Firm Y may go down this route because they have neither the time nor the skills to run their own proposition in-house. But this may change over time and firm Y may decide to set up its own, what stops the firm in question from taking some or all what they have learnt from firm X, even where there is a NDA in place?

I am not an IP expert (just a guy who asks the questions) and I am an interested to know what you think! Is there anyone out their who has IP protection on their proposition or considering doing so? Is it a non-starter?

 

 

 

 

 

 

 

 

 

 

 

 

Abraham Okusanya
Director
Abraham is the founder of FinalytiQ, a research consultancy for platforms, asset managers, and advisory firms. Recognised as one of the country’s leading experts in retirement income, platforms and investment propositions, Abraham has authored several papers on these subjects and delivered talks to the Personal Finance Society, The FCA and several conferences across the country.

He holds a Master’s degree from Coventry University and an alphabet soup of qualifications, including the Investment Management Certificate, Chartered Financial Planner, CFP and Chartered Wealth Manager designations. He was one of 5 finalists for the Professional Advisers Personality of Year Award 2015 but the award went to a more deserving winner, obviously!

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  • Alan Smith

    Abraham

    You make a good point (and I saw that article too from a firm who felt that an investment committee that actually met was a differentiator – however I gave them the benefit of the doubt and put it down to journalistic licence!)

    Our investment process and philosophy is encapsulated in our branding – Intelligent Investing which is trade marked – not the words alone which cant be but the process, style and branding – and way it forms part of a lerget and comprehensive wealth planning process.

    Ultimately it is an investment strategy used in broad terms by many other firms – nevertheless no one has access to the unique style of delivery of the Capital Asset Management ‘Intelligent Investment’ process other than our own clients. 

          

    • Glyn

      Not really it’s just sales speak, if you break down the process most work in similar ways, it’s just the pitch that changes or skill set.

      Investment commitees …. Now then, these are a different matter and predominately window dressing.

      • Thanks for you comments Alan and Glyn. I think you are both right, on its own, an investment proposition or having an investment committee is really no differentiation or an IP. However, as Alan suggested, the ideas may be captured together with the firm’s value proposition and brand.

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