What You Should Know Before Leaving Your Firm


When it comes to leaving your firm, there are certain things every planner must know to avoid making mistakes that could have a negative impact on their career. It’s a topic that affects almost every financial planner, but is rarely, if ever, talked about in a public way. Let’s dig into what you need to know, including how it’ll affect your next steps when you make your exit.

Know the Repercussions of Your Actions

When you accept a position with a firm, you’ll most likely be asked to sign documents like confidentiality, non-solicitation and non-compete clauses. While it’s easy to write these documents off as “new employee paperwork,” you must understand that these are legal documents that can come back to haunt you later.

Here are some best practices for handling that paperwork:

  • Make copies of your paperwork. After you give your notice and have one foot out the door, it can be awkward to make requests of your soon-to-be ex-employer. You can avoid this by making copies at the beginning of your employment and filing them away for safekeeping.
  • Understand what you’re signing. If you’re going to sign a contract, it’s good practice to have it reviewed by a legal professional, so you know what your liabilities are. As a new planner or someone transferring firms, you don’t always know what to look for when reading a legal document. In general, you want to find out who owns the client, who can contact the client and what will happen if you take your client with you to your new firm.
  • Read the fine print. Some firms have contracts that require you to give a lengthy notice period. If you’re starting a new firm and think you’ll be able to hit the ground running two weeks after you give notice at current firm, you might find that you have to stay for another 30 days.

For more information about this topic, check out “What Did I Sign Up For?! Understanding Non-Solicit and Non-Compete Agreements” in the June issue of the FPA Next Generation Planner.

Plan Your Exit Well in Advance

Right now, you might not think that you ever want to leave your current firm. But there may come a time when you feel ready to start your own practice. In that case, it’s helpful to understand what it takes to make a smooth transition. Think of as many aspects as you can and how you’ll deal with them if that time comes.

  • Be ready for the unexpected. You might give your two-week notice and get escorted out immediately. If this happens, you could lose access to your contacts, emails and files. If you prepare in advance, you may be able to retain some of your clients, so you don’t have to start a new book of business from scratch.
  • Pay attention when others leave. Odds are, the way your firm’s management reacts to your co-workers when they head out the door is the same way you’ll be treated. This will help you prepare when it’s your turn.
  • Keep your plans to yourself. If, in your excitement, you tell a client about your plan to start a new firm, you could be in violation of a non-solicit agreement. This would leave you open to legal action and also burn bridges with your old employer, which is the last thing you want to do when already dealing with the stress of starting a new business.
  • Use your work computer for work only. When you leave the firm, any personal information you have on your computer or in your email will be taken from you and archived at the firm. Plus, if you start forwarding a bunch of work email to your personal account, it will set off alarm bells with compliance.
  • Understand how your products work. Some firms use products that are exclusive to them. These proprietary investments or funds can lock your clients in and getting out of them can bring significant fees. If your clients are using these products, you can’t service them properly and it makes it difficult for them to transition with you to your new firm.
  • Make connections before you leave. If you have co-workers you’d like to stay in touch with, either send them a note on your last day or reach out to them on LinkedIn. Making these connections before you move on is much easier because you still have access to their contact information.
  • Plan ahead. Of course, it depends on your employer and its work culture, but the general consensus is that you’ll want at least three to six months of preparation before you pull the trigger. That way you have time to prepare and figure out how (and when) you want to announce your departure.

Consider Your Exit Interview Strategy

When your last day on the job arrives, you may be asked by the firm to conduct an exit interview. Some planners may think that this is an opportunity to air their grievances, but you should understand that your exit interview will be archived and what you say could follow you for a long time. While you may think that burning bridges isn’t a big deal, remember that this industry is still pretty small. If a future employer called your firm asking if they would recommend you, you may find that your future job prospects are limited.

You Will Rebound

No matter how you leave your firm—whether it’s on your terms or theirs—know that you can rebound from it. Even if your exit leaves a sour taste in your mouth, remember that your clients are the most important thing. You can take comfort in the fact that all the training and experience you’ve earned in your career will stay with you. You are a better adviser for it and can use what you’ve learned to help your clients, no matter where you go. After making the transition to a new firm, you’ll find the next one to be much easier.

August Cover

Editor’s note: This article originally appeared in the August 2019 issue of the FPA Next Generation Planner, an app publication that provides helpful and relevant content specifically for NexGen planners. Download the app in the Apple App or Google Play store.

Sarah Li Cain

Sarah Li Cain is a freelance personal finance writer. Connect with her on LinkedIn.

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