Brian Hamburger: Employment considerations

Submitted by kristin.mccasland on September 6, 2019

Charles Schwab]
[Employment Considerations]
[with Brian Hamburger]
[Advisor Services]

[Charles Schwab]
[Brian S. Hamburger, JD, CRCP, AIFA®
[Founder and Managing Director | MarketCounsel]

Advisors, when they're looking to break away or leave their current employer, have to have a clear plan in place. They have to really understand where they are and where they're headed to. And looking at where they are, they really want to take a look at what agreements they may have already subjected themselves to, they may have already signed, or other policies and procedures of the firm. Primarily, we're looking at traditional employment agreements that exist within the brokerage industry, we’re looking at promissory notes, training agreements, and anything else that they may have signed that's pertinent to their employment. The agreements are going to set the stage for what is and isn’t possible, what timeframe is allowable, and also, what information can be taken from one firm to the other. 

The broker protocol sets the stage for advisors and brokers moving between firms. It allows a broker and advisor great predictability, a well-worn path, if you will, in moving between firms, so long as they follow a specific set of rules and procedures, primarily leaving breadcrumbs behind and advising the firm that they're departing what information they're taking regarding what customers, and where they’re headed to.  Now, there's a couple of essential elements of the broker protocol, the most important, however, is ensuring that the firm you’re leaving and the firm that you’re going to are both members of the protocol.

Pre-disclosure of the termination in transition is the number one reason that transitions fail. So that being said, it's best not to tell anybody about this transition that is not on a need-to-know basis. That is a huge challenge for brokers and advisors who are often… who are often praised for bringing people into the room and making sure that everyone is on the same page.  That means that your administrative staff often is unaware of the move until the move is actually underway. That means many people, many of your friends and family are unaware of the move.  

I can't emphasize how important that level of discretion really is for a successful transition. So most often the people that you're going to tell include your closest and immediate family members and service providers that are assisting you, core to assisting you with the transition.  So I don't want to undermine the fact that that is a very unnatural thing for advisors to do, however, I can't overemphasize the importance of maintaining that level of discretion. We have war story after war story of advisors who… whose pre-termination… who on a pre-termination basis had some disclosure that was leaked.  And the reason for that is because folks that are in other walks of life and other industries don’t understand the sensitive nature of the employment within the brokerage industry.

[Charles Schwab]
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Learn what your exit could look like.
Your timeframe for leaving, and what information you can transfer between firms, depend on what agreements you might have already signed.

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