- On November 16, 2017
Advisorbox has launched the Advisor Legal Liberty Initiative (ALLI).
ALLI is the liberty counter-balance for resisting corporate aggression and regression, and promoting positive progression of advisor freedoms of choice.
ALLI has two primary purposes:
- Cover legal expenses for advisors departing from Non-Protocol firms to help ensure a compliant Non-Protocol transition.
- Non-Protocol legal support infrastructure to assist in the defense of advisor’s liberty.
Which advisors qualify for ALLI?
The full list of qualifying criteria is listed below but the two primary qualifications are:
- Advisors who used Protocol to join a Protocol firm, and then got trapped along with their clients, by the firm’s later abrupt exit of Protocol with insufficient notice.
- Advisors who use Advisorbox (and our “open architecture” of channels, platforms, models, and firms) as the advisor’s transition agent for comparing the top tier recruiting options, introductions to the options the advisor is most interested in, and navigation and support throughout the process. Advisor may either stay in the employee channel and “breakout” or “breakaway” to independence. Advisorbox needs to be the “recruiting firm” receiving an industry standard placement fee.
Covering legal expenses for departing advisors
ALLI’s primary purpose is liberating advisors from the fear of Non-Protocol litigation. This is accomplished by connecting departing advisors with expert attorneys and covering the legal costs.
We want to insure departing advisors doesn’t do anything that violates agreement provisions that can place them in jeopardy. We want to offer advisors with free consultations with the some of the best attorneys in the industry so they know what to do correctly to avoid TROs. And perhaps most importantly we want advisors to have a successful client transition process by successfully navigating and complying with Non-Protocol transition protocols.
ALLI covers the costs for advisors to have multiple consultations with our experienced securities employment attorneys about compliant Non-Protocol transitions. The advisor is the attorney’s client and protected by attorney client privilege. The attorneys represent the advisor, not Advisorbox. ALLI just covers the bill.
“I think it’s vital that an advisor departing a Non-Protocol firm understand that a “non-solicitation” provision is not the same as a “non-contact” agreement. To the contrary, FINRA requires that advisors “Know Your Customer” and for good reason. People place their trust, their financial wherewithal, and, quite literally, their means of taking care of their families with advisors. While Non-Protocol transitions are more complicated, advisors should know that they can both comply with their existing employment agreements and their obligations to their customers,” Bradley Kirklin, Partner, Levinthal-Wilkins.
“Transition from a Non-Protocol firm to a Protocol or other Non-Protocol firm calls for a critical assessment of the exposure points for an advisor contemplating a move. As the Protocol landscape continues to evolve, the significance of understanding the limitations of employment agreement restrictions, such as non-solicitation, confidentiality and non-poach covenants, has become ever more important. While advisors can certainly move from one firm to another, it is their conduct within the confines of those restrictions that will impact them most in their potential exposure to claims by the prior firm.” David Harmon, Partner and Co-chair of the Executive Compensation and Employee Benefits Group at the law firm of Norris McLaughlin & Marcus located in New York, New Jersey and Pennsylvania.
In the initial consultations with the attorney, advisors get walked through what they can and can’t do before, during and after they transition. Their current employment contract and any team agreements is reviewed, and a plan of action laid out. The attorney will discuss what kinds of announcement techniques and client communication a non-solicitation provision may allow for and what it doesn’t. They’ll advise on what client information is confidential and what isn’t. Attorney will discuss the advisor’s specific situation and determine if special circumstances exist. Advisors will hear the impacts of social media and best practices. Both individual and team consultations provided. They also assist the advisor with their resignation letter. In addition, there is always a consultation shortly before resigning as a review call to discuss any last-minute questions or clarifications.
Move and join any different broker dealer, independent broker dealer, direct affiliation with custodian, RIA, Hybrid RIA, OSJ, or hybrid platform providers/facilitators that Advisorbox introduced you to and helped you join.
The purpose of this initial representation is to assist ensure a transition compliant with the advisor’s employment agreement and to prevent any cause for the Non-Protocol firm to believe you violated any of the employment agreement’s provisions, including any non-solicitation provisions. If the advisor follows the advice and doesn’t violate any provisions of their employment agreement when they join a different firm or model, but is pursued by their former Non-Protocol firm regardless, with a TRO or injunction, Advisorbox will cover the advisor’s legal costs up to the first $25,000.
ALLI Rules, Restrictions and Additional Details
Advisorbox may close ALLI to additional advisors at any time.
Restricted to advisors who used Protocol to join a Protocol firm, and then got trapped along with their clients, by the firm’s later abrupt exit of Protocol with insufficient notice.
Advisor has acceptable FINRA compliance disclosures with no current pending issues waiting for a settlement, FINRA arbitration or hearing.
Advisors who have not already violated Non-Solicit Agreement provisions, if any, or any other provisions of their employment contract.
Maximum amount paid is up to $2,500 per advisor unless exception is made by Advisorbox. Typical consultations cost $1,500 to $2,000 in attorney fees which is why we placed a maximum with exception policy.
Advisor must have $500,000 or more in trailing twelve months revenues.
Must use ALLI pre-approved attorneys.
ALLI support is only provided to advisors who use Advisorbox (and our “open architecture” of channels, platforms, models, and firms) as the advisor’s transition agent for comparing the top tier recruiting options, introductions to the options the advisor is most interested in, and navigation and support throughout the process.
Advisor may either stay in the employee channel and “breakout” or “breakaway” to independence.
Advisorbox needs to be the “recruiting firm” receiving an industry standard placement fee.
All details from * and ** above have been met and are incorporated herein.
Advisor has successfully transferred their licenses to the new firm.
If the advisor follows the basic checklists of do’s and don’ts provided by the attorney and the former Non-Protocol firm commences any legal action against the advisor, including a TRO, Advisorbox will cover the advisor’s attorney representation, both hourly and their reimbursable costs, up to the first $25,000.
If the legal defense costs are covered by the firm the advisor joined (broker dealer, independent broker dealer, direct affiliation with custodian, RIA, Hybrid RIA, OSJ, or hybrid platform providers/facilitator) then Advisorbox and the advisor will permit the newly joined entity to pay for legal costs without an Advisorbox contribution. If the same, refuses to pay for legal costs on your behalf, then Advisorbox will pay for your attorney representation, both hourly and their reimbursable costs, up to $25,000. Advisorbox covers the first $25,000 paid directly to attorney and not reimbursed to advisor.
Posted by Darin Manis
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