How the FTC’s Rule on Non-Competes May Impact Financial Advisors: An Attorney’s Perspective

With Matt Baum, Partner, Fox Rothschild

?Overview

Attorney Matt Baum breaks down the facts on the latest FTC Noncompete Rule, the potential impact on an advisor’s business, current agreements, the ability to transition, and more.

About this episode...

?On April 23, 2024, the Federal Trade Commission announced a comprehensive “Noncompete Rule,” banning non-competes for “all workers, even senior executives,” as stated on their website.

It’s a hot topic amongst advisors, who are curious about how this ruling might impact their businesses, current agreements, and, ultimately, their ability to transition.

As advisor advocates, Diamond Consultants applauds any action that enables advisors to choose the best firm for their clients and business—without limitation or threat of litigation.

However, as it stands now, we aren’t convinced this new rule will significantly impact an advisor’s business life.

And, as with any new ruling, it begs more examination, particularly as it relates to those in the wealth management industry.

So, we asked attorney Matt Baum to join Louis Diamond on this special episode. Matt is a partner at the law firm Fox Rothschild and specializes in the financial services industry.

In this episode, Matt breaks down the facts around the current FTC ruling and offers his thoughts on the most common concerns we’re hearing from advisors, including:

1. When this rule will go into effect and the impact on existing agreements.
2. Whether certain elements of an advisor’s current employment agreement may ultimately be non-enforceable.
3. How this might impact non-solicit agreements.
4. What this might mean for garden leave provisions.
5. The impact on business owners.
6. And, most importantly, what advisors need to do to protect their business and livelihood.

As firms continue to find new ways to stave off attrition, topics like this are critical to the employee advisors who are most impacted by regulatory changes. Likewise, business owners need to understand their responsibilities when it comes to provisions that may affect their practices.

While not intended to replace the advice of counsel, this episode seeks to break down the facts and provide general guidance on an evolving topic.

Related Resources

The 7 Unintended Consequences of Staying the Course - While it may seem “safer” to stay put, there are risks in doing so that many advisors are unaware of.

Retire-in-Place Programs: Are They All They’re Cracked Up to Be? - 5 reasons why advisors are forgoing what was designed to be a no-brainer deal.

Diamond Consultants 2023 Advisor Transition Report - An Update on Advisor Movement in the Wealth Management Industry.

?You can also listen to the full episode on our website, as well as on Apple Podcasts, Google Podcasts, Stitcher or Spotify.?

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