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.   Listen in… > Download a transcript of this episode… NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.   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: When this rule will go into effect and the impact on existing agreements. Whether certain elements of an advisor’s current employment agreement may ultimately be non-enforceable. How this might impact non-solicit agreements. What this might mean for garden leave provisions. The impact on business owners. 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. Want to learn more about where, why, and how advisors like you are moving? Click to contact us or call 908-879-1002.   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.   Matthew B. Baum Partner Matt represents financial industry participants, including broker-dealers, financial advisers and RIA firms as well as businesses and individuals in litigation and arbitrations. Matt has represented multiple Fortune 500 financial institutions, in addition to many small and middle market firms. He has also served as counsel to more than 150 financial advisers throughout his career. Matt appears on behalf of clients in arbitrations (including FINRA and AAA) and in state and federal courts. Among other things, Matt has represented clients in 100+ FINRA arbitrations, including both industry and customer disputes. He also frequently advises broker-dealers, RIA firms and financial advisers in connection with transitions and recruiting matters. Matt serves as a go-to resource for multiple broker-dealers for transition and recruiting-related matters. He also is consulted as an outside general counsel for multiple RIA firms. Prior to joining Fox Rothschild, Matt was a partner of a Manhattan based mid-sized law firm. Before that, he practiced at a securities law boutique located on Wall Street. Matt was a John Harlan Marshall Scholar at New York Law School. There, he also served as Coordinating Notes Editor of the New York Law School Law Review.   Also available on your favorite podcast app and other media sites.