Investment Advisor Employment Agreement

The scope of non-compete obligations falls under land law, which means that the restrictions that can be imposed on departing workers vary considerably depending on the state of employment. California, for example, abhors notorious non-compete clauses and generally renders them unenforceable unless they occur in connection with the sale or dissolution of a business. These are specific legal exceptions to the general rule. I recently decided to leave the AIR where I worked after it became clear that the promised succession plan would never come to fruition, which I realized after listening to your Financial Advisers Success podcast with David Grau a few months ago. I have always had a very clear book of clients that I deal with within the company, but the company made me sign a non-competition clause in an employment contract when I joined, where I agreed not to offer financial advisory services to the firm`s clients for a year when I leave, even though I had a certain list of clients, which I was allowed to contact a week after I left. But when I left the company, within two days, they contacted all my clients with a letter informing them that they would be assigned to another company consultant and assured that the company could still serve them. At that time, one of my former clients drew my attention to the letter, so I contacted some of them to explain the situation and what really happened. I didn`t leave the industry, I just left the company. And again, the company beat me with a cease and desist letter and five days later I was served with a lawsuit for violating the non-compete obligation. What should I do? A non-compete obligation or restrictive agreement is a section of the employment contract that prohibits a physician from practising in certain areas for a certain period of time after termination. It is clear that such a clause is not in the best interests of the physician. Most employers will try to include such a clause, so you may want to negotiate a clause that is the least restrictive.

Carefully study the non-compete clause or restrictive agreement, as this may limit the places where you can practice in the future. Again, the key to not advertising is that you can still be a financial advisor and they can attract new clients. You can start over and if your former clients find their way to you, you can work with them, but you can`t contact them and ask them to come with you. You can`t ask them before you leave, as it`s actually a complete violation of your employment contract with your current company, which will almost certainly fire you. And you can`t recruit them after you leave because it would violate the non-invite. Michael Kitces is Responsible for Planning Strategy at Buckingham Wealth Partners, a turnkey wealth management services provider that supports thousands of independent financial advisors. However, due to the challenges of enforcing a non-compete competition code, many RIAs that really want to protect their relationships with customers, with something that can actually be enforced, require employee consultants to sign a non-solicitation instead. A non-solicitation agreement states that you will not advertise to any of the company`s customers. In other words, you can`t contact any of your former company`s customers to ask you to do business with you after you leave. Even if they were “your” customers. The main difference between non-solicitation and non-competition is that you can continue to be a financial advisor with non-solicitation. And you can be a consultant in the same industry, in the same niche and even in the same geographic region.

And because non-solicitation has a narrower scope, it is much more likely to be applied if it is questioned. In particular, a no-prompt doesn`t mean you can`t always work with your past customers, it means you can`t advertise them. So you can`t reach them after you leave and ask them to continue working with you, but you may be able to work with them if they follow you on their side. What do you think? Have you ever left a company with a non-competition clause or a ban on non-advertising? Are these employment contracts becoming more and more popular in the consulting industry? Do you think these types of agreements are “fair” for new consultants? Please share your thoughts in the comments below! I hope this is a useful food for thought and an indication of some of the issues you need to be aware of when considering leaving your current consulting firm while being subject to some sort of employment contract with a non-compete clause or advertising ban. .

Posted in Uncategorized