3. Review your current employment agreements. As you prepare for your transition, you’ll also want to consider your current terms of employment, including any non-compete, client solicitation, or confidentiality agreements. The language of such agreements can be intimidating, though perhaps not as restrictive as it may appear on the surface. It’s important that you obtain the expert, confidential opinion of an attorney well versed in securities law and the broker-dealer industry before you start approaching clients or planning your exit.
You’ll also want to take into account any financial arrangements with your current employer, such as promissory agreements, outstanding loans from retirement accounts, or reimbursement arrangements for training or certifications. In most cases, you’ll have to pay off any loans when you separate, and it will be important to keep these commitments in mind when considering the timing and financial implications of your transition.
Similarly, if you have any personal cash or investments held in-house at your firm, you may want to start migrating this money elsewhere. In a worst-case scenario, an advisor may find personal accounts frozen by an employer in the event of a non-solicitation dispute. If you start to move money around, you’ll want to do so in a gradual, discrete manner so you don’t raise red flags about your intentions.
4. Build your support network. As an RIA, you’ll be responsible for every aspect of your business, from marketing and account management to back-office prospecting, accounting and compliance. While it can be tempting to try to handle many of these functions yourself, your time is better spent meeting with clients and building your business. Consider what you can outsource, or how you might be able to leverage technology to handle some of these functions. Make a list of qualified professionals, such attorney or accountant, who you can consult for confidential advice as you start planning for independence.
5. Be discrete. As you begin preparing your transition, it can be tempting to discuss your plans with potential clients and vendors, as well as friends and family members. The more people you talk to, however, the more likely it is that your current employer will be alerted to your plans before you’re ready to resign. This can create legal problems, or land you without income or support before you’re ready to make the leap. For this reason, you’ll want to limit the people you tell, especially when it comes to colleagues in your current practice. Similarly, keep email communications related to your transition on a separate, private email server instead of using the broker-dealer’s email server.