FINRA licensed:  check.

SEC registered representatives:  check.

Broker-dealer employment agreements:  check.

Team practice agreement:  check.

Non-registered staff employment agreements:  um……why?

Ok.  You’ve got everything in place in your practice, except an employment agreement with your unregistered staff.  Why would that matter?  Your staff is loyal.  Your staff love your clients.  Your clients love your staff.

Well…here’s a real situation that recently happened in one practice.

A long-time staff person (“Sandy”) handled a little bit of everything in an advisor’s practice (“Ron”).  She spent much of her time working directly with clients – scheduling appointments, returning phone calls, answering questions – you know, cementing those relationships so critical in a practice. Ron appreciated Sandy’s work, but after a while began to take her for granted.  As his practice (and income) grew, Ron bumped up Sandy’s income, albeit not much compared to his earnings.  Because of Sandy, the practice almost ran itself, allowing Ron to spend less time in the office.  He deserved it, after all the work he had done to bring the practice to this level.

Well, Sandy did a lot of work to bring the practice to this level too! She was good at her job, and other advisors knew it.  Not surprisingly, Sandy received a few inquiries to see if she wanted to make a change and join a different practice.  At first she wasn’t interested, but she began to realize that things were not going to change if she stayed with Ron.  The other advisor offered to bring her on as part of his team practice, with more opportunity for sharing financially in the success of the practice.

So she decided to make the leap. But not before contacting Ron’s clients and letting them know she was moving to another practice.  Because Sandy is not registered, she was not bound by the Broker Protocol or other solicitation or poaching restrictions.  The hiring advisor did nothing wrong either.  Guess what?  Because of her exemplary relationships with the clients, a large number of them – and $20 million AUM – went with her.  A painful lesson, to be sure, but one that could have been avoided.

Had Ron and Sandy signed a legally-binding employment and separation agreement, at minimum Ron could seek reimbursement from Sandy and the hiring advisor for the lost income.  A properly executed agreement would have made clear what Sandy could expect in her job (i.e. hours, responsibilities, wages, separation agreement if she were to leave the practice but stay in the industry) and what Ron could expect as her boss (clarity on responsibilities, performance management, separation parameters, etc.).  If only…

Mitigate the risk involved in the interpersonal relationship you and your staff have with your clients.  It’s never too late to put an employment and separation agreement in place, one that protects both you and your staff.

Don’t wait until you have a problem to take action.  Contact us.  We’re here to help.


Dan D’Alio, President



Karen Kind



EmployShare, Inc.

A single source solution to manage and protect your practice