From the Desk of Jim Eccleston at Eccleston Law LLC:
On October 10, 2016, advisors Ken Griffen, Paul Vaida, Royden Grimm, Barry Saluk and Jared Bloxsom left Bank of America Merrill Lynch to join Janney Montgomery Scott in Mystic, Connecticut. The team has $800 million in assets under management.
From the Desk of Jim Eccleston at Eccleston Law LLC:
Advisors Rajeev Dhillon and Joseph Lesko left J.P. Morgan Securities to Join Wells Fargo Advisors in Fort Lauderdale, Florida. The team has $253 million in assets under management.
From the Desk of Jim Eccleston at Eccleston Law LLC:
On September 26, 2016, advisor Brad Weinman left Morgan Stanley to join Bank of America in West Palm Beach, Florida. Mr. Weinman has $240 million in assets under management.
On September 30, 2016, advisers Darren Lehrman, Brian Marzulli, and Lucille Costa left Stifel Nicolaus &; Company to join RBC Wealth Management in Parsippany, New Jersey. This team of advisers has $300,000,000 in assets under management and $1,500,000 in production.
From the Desk of Jim Eccleston at Eccleston Law LLC:
For three years FINRA has attempted to pass a rule that would make brokers’ employment transitions more transparent for clients. Last Wednesday FINRA passed the rule. The rule is designed to encourage investors to access important information relating to their accounts in a broker’s transfer to another firm.
The new rule requires that transferring brokers send an educational communication to investors if they are trying to persuade them to move to the new firm. FINRA will author document, and it will outline possible considerations for the clients such as whether the financial incentives at the new firm create a conflict of interest, whether any portion of the client’s assets cannot follow them to the new firm, and any potential fees or costs the client might face.
As the SEC views the rule, it will encourage customers to make inquiries to brokers which can help to increase communication between the two regarding potential implications of transferring assets. Moreover, the SEC feels that the increase of communication between the two will serve to benefit the customers when deciding whether or not to transfer.
An initial proposal required transitioning brokers to disclose details about their new compensation packages, but, after facing industry resistance, was modified to the current “educational communication” model. FINRA is confident that the new proposal is satisfactory to both investors and advisers. The fundamental concern being that the investors remain educated and the advisers receive consideration for the privacy of recruiting compensation that is often involved with transfer.
Industry professionals support the new rule, especially citing the balance it holds between both investors and advisers. Danny Sarch, president of Leitner Sarch Consultants, says, “It’s a sophisticated transaction and most clients don’t want to learn to that extent about it.” In his experience clients are less concerned with discovering the recruitment compensation package and more concerned with personal fees and restrictions.
A minor concern associated with the new rule may be that it accelerates the transfer of advisers who may be on the fence and hoping to get the jump on any new standards imposed by regulators. But Mindy Diamond, president and chief executive of Diamond Consultants, says that “for most quality advisers who have a deep relationship with clients, it will be a non-event.” She doesn’t expect that this should be a significant effect in the industry, at least for quality advisers. Mr. Sarch says that he typically advises brokers to reveal their recruiting package to clients in the first place. Through his experience in broker recruiting, previous firms will show the new compensation package to clients in an effort to deter clients from transferring anyway.
The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.
From the Desk of Jim Eccleston at Eccleston Law LLC:
A battle between Wells Fargo Advisors and a former employee turned ugly when emails leaked showing the employee purportedly had funneled business to his new firm, while still employed at Wells Fargo.
Wells Fargo accuses the rep of funneling business for eight months before he officially left the company. He is alleged to have breached his fiduciary duty and to have engaged in a “civil conspiracy.” Wells Fargo is asking for more than $1.7 million in damages.
The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services.
The North American Securities Administrators Association (NASAA) has developed a model rule outlining policies that investment advisers should have in place to respond to natural disasters or the death or incapacitation of an executive.
The NASAA rule requires every adviser to adopt written procedures for business continuity and succession planning, and shows how firms will protect books and records, establish an alternative means of communicating with clients, relocate the office, reassign key personnel and generally minimize disruption to the business.
The rule allows flexibility in the plans. They can vary based on the adviser’s size, services and locations. The model rule must be adopted by individual states before going into effect.
From the Desk of Jim Eccleston at Eccleston Law LLC:
According to AdvisorHUB, many signs including the cross-selling, Merrill Edge, US Trust, bank referrals, team analysts and new non-compete contracts, have showed Bank of America/ Merrill Lynch are ready to exit Protocol.
One manager on the East coast at Merrill said the deal structures that Merrill is putting together right now have given advisors many significant pauses. Almost all of the deals have outsized total percentages but also contract lengths. And there is an active program to recruit back Merrill advisors that left the firm 5 – 6 years ago and offer them an extremely lucrative payment. The problem is how the firm can be assured that it will recoup all of that cash.
A director in Merrill Florida branch was concerned about analyst non-compete contracts. The new contracts for team analysts and junior advisors and the non-compete language are about the way to ensure that some members of larger teams are forced to stay at the firm should the senior members leave. Reps are concerned that similar provisions will apply to the tenured advisors.
Other voices are from NYC. They project that Merrill is going to lock up as many legacy recruits as possible, discontinue recruiting, pull out of the Protocol, and elicit non-compete and non-solicit contracts.
The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services.
Eccleston Law Offices is excited to announce our NEW fixed fee Transition Compliance Package for Financial Advisers!
For one fixed fee, Chicago-based Eccleston Law Offices will offer reps several services – including planning in advance to successful transition, being on call for any difficulties that may arise, determining rights and responsibilities – whether the adviser is governed by the protocol for broker recruiting or not.
From the Desk of Jim Eccleston at Eccleston Law Offices:
UBS brokers in San Francisco recently staged a kind of mutiny with some prepared to resign in order to prevent their popular branch manager, Michael Williams, from being replaced.
The firm considered replacing Williams due to poor branch performance. Of the firm’s eight geographic regions, that region was ranked among the lowest in terms of recruiting.
Moves are common in the brokerage industry, where managers are frequently reassigned, relocated or sometimes fired as firms keep a close watch on performance. Advisers may be reluctant to see their manager go, but it is rare for the firm to backtrack on its decision.
About 20 of the 75 advisers objected. Many included top producers, who began placing calls to executives at the firm, including the head of the adviser group, the head of wealth management, and the firm’s chief executive. They told the executives the move was a mistake. Support for Mr. Williams mounted, and by the weekend, the firm reversed its decision.
The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.