When hiring a financial advisor, you want to be sure that they have your best interests in mind. But what happens when that advisor decides to leave the firm and take their clients with them? A non-solicitation agreement can help protect you from losing your advisor and your investments.
A non-solicitation agreement is a contract that prohibits an advisor from soliciting their former clients for a certain period of time after leaving their current firm. This means that the advisor cannot actively reach out to you to try to continue a business relationship after they have left the firm.
This type of agreement is standard in the financial industry, and it is meant to protect both clients and firms. For the client, it ensures that they will not be bombarded with calls or emails from an advisor who has moved on to another company. It also protects the firm from losing valuable clients and assets to a competitor.
Non-solicitation agreements typically have a time limit, ranging from six months to a year. During this time, the advisor is not allowed to contact their former clients or attempt to solicit business in any way. However, clients are still able to initiate contact with the advisor if they choose to do so.
It is important to note that a non-solicitation agreement does not prevent an advisor from leaving their firm and starting their own business. It simply limits their ability to take their former clients with them or actively seek out new clients immediately after leaving the firm.
In addition to protecting your investments, a non-solicitation agreement can also provide some peace of mind. Knowing that your advisor cannot contact you after they have left the firm can help alleviate any concerns or doubts you may have about their intentions.
When choosing a financial advisor, take the time to review their non-solicitation agreement and ask any questions you may have. Understanding this contract can help ensure that your assets and investments are protected, even if your advisor moves on to another firm.
