On April 23, 2024, the Federal Trade Commission announced a sweeping “Non-Compete Rule,” banning non-competes for “all employees, even senior executives,” according to their website.
It's a hot topic among advisors, who are curious about how this decision could affect their businesses, current deals and, ultimately, their ability to transition.
As adviser lawyers, Diamond Consultants welcomes any action that enables advisers to choose the best firm for their clients and their business – without restrictions or threats of litigation.
However, as it stands now, we are not convinced that this new rule will significantly affect an advisor's business life.
And, as with any new decision, it warrants more scrutiny, especially as it relates to those in the wealth management industry.
So we asked the lawyer Matt Baum to join Louis Diamond in 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 surrounding the FTC's current ruling and offers his thoughts on the most common concerns we're hearing from advisors, including:
- When will this rule come into force and the impact on existing agreements.
- Whether certain elements of an advisor's current employment agreement may ultimately be unenforceable.
- How might this affect unsolicited deals?
- What this might mean for garden holiday provisions.
- Impact on business owners.
- And, more importantly, what advisors must do to protect their business and their livelihood.
As firms continue to find new ways to avoid attrition, topics like this are critical for employee counsel who are most affected by regulatory changes. Likewise, business owners must understand their responsibilities when it comes to provisions that may affect their practices.
While not intended to replace the advice of an attorney, this episode is intended to break down the facts and provide general guidance on an evolving topic.