James Eccleston

Dec

2018

UBS and Morgan Stanley’s Decision to Leave the Protocol for Broker Recruiting Has Paid Off for Them

From the Desk of Jim Eccleston at Eccleston Law LLC:

Since UBS and Morgan Stanley’s decision to pull out of the Protocol for Broker Recruiting last year, the number of advisors departing those firms appears to have slowed. This is good news for Morgan Stanley and UBS which want to reduce recruiting costs and instead focus on the growth of their advisors’ book of business through investments in technology.

More specifically, according to Investmentnews data, Morgan Stanley has cut in half its attrition rate since exiting the Broker Protocol. Data from UBS is less clear but it is likely also that the firm has cut its attrition rate as well.

Experts point to attrition rate cuts at Morgan Stanley and UBS as a result of challenges advisors face when deciding to leave their current firms because they are currently not protected under the Broker Protocol.

Furthermore, the biggest challenge departing financial advisors face is the threat or the actual filing of a temporary restraining order by their former firms. Moreover, since leaving the Broker Protocol, Morgan Stanley, UBS Financial Services and other firms have filed TROs to prevent their former financial advisors from contacting, soliciting and doing business with their former clients.

Morgan Stanley, for instance, has filed at least four temporary restraining orders in federal courts against their former financial advisors and has been successful in those actions. Significantly, one former Morgan Stanley advisor even lost his new job at an RIA after the wirehouse filed a TRO against him immediately after leaving the firm.

These cases and many others underscore the need for financial advisors to retain competent securities counsel to extensively plan their transition. While no transition is stress-free, it is crucial for financial advisors to be prepared to win the TRO fight. The attorneys at Eccleston Law do so, specifically, we assist advisors in planning their transition, negotiating their transition and employment agreements, and defending them when their former firms file litigation and arbitration.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities Fraud, Compliance Protection, Breach of Fiduciary Duty, FINRA Matters, and much more. 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.

Jan

2018

FINRA Rule 2273: A Friend to Transitioning Reps- Part 1

From the Desk of Jim Eccleston at Eccleston Law LLC:

Financial advisors transitioning to a new firm often contact their customers in order to retain their business.

FINRA Rule 2273 requires recruiting firms to provide registered representatives with educational communication materials that highlight key considerations for their customers to consider in deciding whether to transfer their assets to the new firm.

This is the first in a series of posts to guide brokers through the frequently asked questions regarding FIRNA Rule 2273.

Frequently Asked Question #1: Does Rule 2273 apply if the registered representative was hired by the recruiting firm prior to the effective date of the rule (November 11, 2016)?

According to FINRA, Rule 2273 applies only if the registered representative was hired by or associated with the recruiting firm on or after the effective date of the rule. Therefore, if a registered representative was hired before November 11, 2016, communications between former customers and the representative are not subject to the requirements of Rule 2273.

Frequently Asked Question #2: Does Rule 2273 allow member firms to alter the format of the educational communication while retaining the substance of the communication?

According to FINRA, member firms are not allowed to alter the format of the educational communications. FINRA has developed a standardized communication with a FINRA logo and member firms are required to follow the requirements of the form.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial advisors including Broker Litigation & Arbitration, Strategic Consulting Services, Regulatory Matters, Transition Contract Review, and much more. 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.

Feb

2017

HighTower Grabs a $1 Billion Wells Fargo Team

From the desk of James Eccleston at Eccleston Law, LLC:

A $1 billion team has left Wells Fargo to go independent with HighTower. After leaving Wells Fargo, the team of recruits formed Fortress Wealth Planning in Jacksonville, Florida.

In all, HighTower picked up a combination of 14 teams and tuck-ins in 2016. HighTower attributes its grown to its fiduciary mindset and open-source, multi-custodial approach. In addition, there has been an overall industry-trend which demonstrates that independence remains a popular option for advisors. HighTower now has over 190 advisors operating from offices in 26 states.

Feb

2017

Current SII Investments Recruitment Deal

From the desk of James Eccleston at Eccleston Law, LLC:

SII Investments has marketed a recruitment deal to financial advisors which consists of an upfront cash payment between 5% to 30%. Additionally, there is a Year 1 payout bonus of 5% to 10% and a Year 2 payout bonus of 5% to 10%.

All proposed deals are negotiable and reflected in numerous agreements such as promissory note and employment agreements. Reps should retain qualified legal counsel to review those documents in advance of committing to transition to a new firm.

Feb

2017

Current Steward Partners Recruitment Deal

From the desk of James Eccleston at Eccleston Law, LLC:

Steward Partners has marketed a recruitment deal to financial advisors which consists of an upfront cash payment up to 100% cash and up to 100% in equity. In addition, a succession plan deal may provide for less in cash plus equity and books/practices under $1M for candidates looking to retire. Lastly, premiums still are offered an additional 25% in equity for first adopters in new markets (100% cash plus up to 125% equity).
All proposed deals are negotiable and reflected in numerous agreements such as promissory note and employment agreements. Reps should retain qualified legal counsel to review those documents in advance of committing to transition to a new firm.

Feb

2017

Current Summit Financial Recruitment Deal

From the desk of James Eccleston at Eccleston Law, LLC:

Summit Financial has marketed a recruitment deal to financial advisors which consists of an upfront cash payment between 5% to 25%. Additionally, there is a year 1 payout bonus of 5% to 15% and a year 2 payout bonus of 5% to 15%.
All proposed deals are negotiable and reflected in numerous agreements such as promissory note and employment agreements. Reps should retain qualified legal counsel to review those documents in advance of committing to transition to a new firm.

Feb

2017

Current Waddell and Reed Recruitment Deal

From the desk of James Eccleston at Eccleston Law, LLC:

Waddell and Reed has marketed a recruitment deal to financial advisors which consists of an upfront cash payment between 5% to 50%. Additionally, there is a year one Asset Transfer payment (forgivable loan): 5% to 50%.

Jan

2017

Current Wells Fargo Finet Recruitment Deal

From the desk of James Eccleston at Eccleston Law, LLC:

Wells Fargo Finet has marketed a recruitment deal to financial advisors which consists of an upfront cash payment between 25% to 75%. Additionally, the hurdle in order to meet back-end production goals under the deal is:

· Year 1: Hurdle – 75% of revenue Payout bonus: 0% to 50%

Jan

2017

Current RBC Recruitment Deal

From the desk of James Eccleston at Eccleston Law, LLC:

RBC has marketed a recruitment deal to financial advisors which consists of an upfront cash payment between 100% to 140%. Additionally, the hurdles in order to meet back-end production goals under the deal are:

· Year 1: Hurdle – 50% of assets and revenue

Payout bonus: 30% of production

· Year 2: Hurdle – 85% of assets and revenue

Payout bonus: 25% of production

· Year 3: Hurdle – 100% of revenue

Payout bonus: 25% of production

· Year 4: Hurdle – 115% of revenue

Payout bonus: 25% of production

· Year 5: Hurdle – 125% of revenue

Payout bonus: 15% of production

Jan

2017

Current Raymond James Financial Recruitment Deal

From the desk of James Eccleston at Eccleston Law, LLC:

Raymond James Financial has marketed a recruitment deal to financial advisors which consists of an upfront cash payment between 10% to 30%. Additionally, the hurdle in order to meet back-end production goals under the deal is:

· Year 1: Hurdle – 75% of revenue Payout bonus: 0% to 50%

· Year 1: Hurdle – 50% of assets and revenue

· Year 2: Hurdle – 85% of assets and revenue

· Year 3: Hurdle – 100% of revenue

· Year 4: Hurdle – 115% of revenue

· Year 5: Hurdle – 125% of revenue

· Year 1: Hurdle – 50% of assets and revenue Payout bonus: 10% to 30% of production