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Advice on training agreement

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Apr 15, 2008 9:21 pm

ha ha

Apr 15, 2008 11:50 pm

[quote=outofedj]

Hi Broker24,



Thank you for the answer. In the article above, Bill Singer cited a case where a rep was sued for training costs and lost, even though he took a non-sales management position at a bank. Would Jones be this vindictive?



outofedj[/quote]



I think not. As Spiff said, most firms just want to make sure you don’t take their investment (you and the training they just handed you, along with a salary for producing nothing but a loss for the company) and run to another firm and use it. And this is the case probably for most firms, not just Jones.
Apr 22, 2008 4:44 pm

The agreement is worded so that EDJ can go after you whether or not you take a sales position.

Apr 22, 2008 7:10 pm

I’ve just never heard of it happening.  Doesn’t mean it won’t, but based on the nmber of people that come and go and don’t make it, I highly doubt they will single YOU out to try and recoup training costs.  But don’t take my word for it.

Apr 22, 2008 9:16 pm

I haven’t really looked into it, but I’ve seen a few post from people leaving who’ve been with Jones for for more than the 3 years and have still had legal problems or at least threats.  Is that really true?  Does Jones think that once you sign up you’re entire life as a FA must be with them?  Also, say you stick with them for 10 years and then go Indy, you’ve more than made them their money back, I don’t see why you can’t call your clients or send them a letter telling them how to transfer everything to your new firm. 

  I understand the training costs within the first 3 years, I'm just curious about leaving after that.
Apr 22, 2008 11:35 pm

The training cost are more of a fine than anything else. Most of your trainers are volunteers office profitablity number is almost double of what my expenses are,and i am in a fairly exspensive prop. for the area. I have never spoke to anyone who has gone to court but i would think they would need justification for there bill, other than you had to sign it to get the job.

Apr 23, 2008 1:59 pm

Old Spice,

  Generally here's the deal: if you leave within 3 years and continue using your license at another firm, they may or may not come to you for pro-rated reimbursement (generally your new firm would/should defend you, help with legal support, and negotiate down and pay settlement).  If you do not take your license somewhere else, they will not come after you.  After 3 years, they have zero recourse.  I have NEVER heard of Jones coming after someone after their 3 year period.  Now, as with many firms, they may apply for a TRO to block you from contacting your clients at Jones for a period of time, but that's about it.   I think the whole "Jones coming after you" bit gets a little overblown on this site sometimes.
Apr 23, 2008 2:26 pm

[quote=IsOldSpiceRightForMe]I haven’t really looked into it, but I’ve seen a few post from people leaving who’ve been with Jones for for more than the 3 years and have still had legal problems or at least threats.  Is that really true?  Does Jones think that once you sign up you’re entire life as a FA must be with them?  Also, say you stick with them for 10 years and then go Indy, you’ve more than made them their money back, I don’t see why you can’t call your clients or send them a letter telling them how to transfer everything to your new firm. 

  I understand the training costs within the first 3 years, I'm just curious about leaving after that.[/quote]
There are two separate and distinct legal issues here.

First is the training costs during the first 3 years.  You say you understand that issue so no need to say more about that.

The second is the restrictive covenants, generally in the form of a non-solicit agreement.  This clause does not generally have any time frame to it, i.e. it doesn't go away after, say, 10 years.  EJ - and in fact all the main B/Ds - tend to come after some (but not all) FAs who leave and take their clients with them.  Don't let this possibility deter you, as there are steps you can take to minimize the risks and generally speaking the most likely "bad" outcome will be to negotiate a buyout of some small percentage of your trailing 12 month production.

This may not seem fair, and has little to do with making their money back on you. It has to do with making a few more bucks off of you and, more importantly, maintaining leverage over other FAs who will be less likely to leave if they know they have to fear these same repercussions. 

Again, this is not simply a EDJ thing - this is more or less industry standard outside the independent B/Ds.
Apr 23, 2008 3:01 pm

I am not trying to stand behind Jones or any other firm, but think of it this way.  Contractually, legally, these clients belong to and are "owned" by Jones.  If you hired a protege or underling or whatever and paid for their licensing, rent, and devoted time and effort to his/her success, you'd be pissed too if he/she up and left and tried taking all the clients with him.  I completely understand the client gets caught in the middle, and it is all legalese, but no matter what they say, corporate views these people as THEIR clients, not ours.  I think we tend to focus way too much on Jones on this and all issues, but I understand them coming after larger producers.  Small time, nickel and dime they let walk easily.

Apr 23, 2008 4:13 pm

I completely disagree with their right to do that (even though I recognize that it is their legal right).  If I stay with Jone (or any othe company) for 10 years, run a profitable office, make them lots of money (much more than what they’ve put into me), and bust my ace to build a solid book of client, then I decide to leave, I feel like I owe them nothing.  Those should be my clients that I’ve been working with for the past 10 years.  If I was going Indy after 10 years I know it would be the clients choice, but if 90% of them want to go with me I don’t see what else Jones expects from me.  It seems to me like they expect you to sign a contract and stay with them for life. 


I completely understand the 3 year contract for training costs, but coming after someone who's been made them more money than they've invested into that person for several years just because the person wants to work somewhere else seems almost communist.
Apr 23, 2008 4:38 pm

OldSpice,

  Your youth is showing in your naive post.  You are an employee of a company.  Technically, it is your job to service and provide products through your firm for that client.  The clients' statements don't say, OldSpice Inc.    What you believe is fair or not has little relevance to what your company believes.  Get this:  You are replacable.  Sure, you might have built a nice relationship, but you don't own any clients.   If you ran the company, what would you tell advisors that leave with their clients after 10 years?  "Ok, have a safe drive across the street.  Let me know if you need help carrying out copies of clients' accounts".  Don't be so naive.  You would say, "Those clients belong to us.  They have accounts with us.  If you try to take bread off of our table, we'll come after you".   Nobody above you really cares what you think about this.  That is not meant to be rude, just the truth.
Apr 23, 2008 4:40 pm

[quote=IsOldSpiceRightForMe]I completely disagree with their right to do that (even though I recognize that it is their legal right).  If I stay with Jone (or any othe company) for 10 years, run a profitable office, make them lots of money (much more than what they’ve put into me), and bust my ace to build a solid book of client, then I decide to leave, I feel like I owe them nothing.  Those should be my clients that I’ve been working with for the past 10 years.  If I was going Indy after 10 years I know it would be the clients choice, but if 90% of them want to go with me I don’t see what else Jones expects from me.  It seems to me like they expect you to sign a contract and stay with them for life. 


I completely understand the 3 year contract for training costs, but coming after someone who's been made them more money than they've invested into that person for several years just because the person wants to work somewhere else seems almost communist.[/quote]
No problem.  Don't sign the contract that gives them these rights, and they won't have those rights.  No one is forcing you to proceed.  Of course, you won't be hired either, but that's the price of admission.  You can complain about it, but don't waste too much energy tilting at windmills. 
Apr 23, 2008 5:19 pm

I know that’s the truth, I’m just saying it sucks to think that if you get into the business and ever decide to go Indy, you could face a legal battle just to take some of your hard work with you.  I’m still going to get into the business, that’s just one aspect of it that I’m not crazy about.  If I ever go Indy or change companies I’ll just cross that bridge when I get there. 

  I don't think it's naive to say something sucks and doesn't seem fair.  That's my opinion from my side, and obviously the company's opinion is different, that's the subject of my post.    When did I ever say or act like I'm not replacable?  But, the company is replacable too.  And clients aren't "owned."  They may be under the company's official management and not mine, but if that client wants to leave to go with me that's his or her own decision, and if it can't be proved that I persuaded them to follow me (ie paper, e-mail, recordings) then that is something that's out of my control.    If I ran the company I would be disappointed to be loosing someone who's been making me money, but I wouldn't expect that person to dedicate their life to working for me.  That's business, and I'm not going to waste my time, money, and reputation on trying to make that person's life miserable because they decided to try another route.  I'd probably send a letter to all of their clients explaining who their new FA would be and how nothing will change, maybe even ask for an appointment to meet face to face.  But, if their clients requested to move with that FA to their new firm, that sucks but that's business.    Anyway, this whole debate isn't going to change the way companies do business.  As long as FA's sign then contract, which I will, it's not going to change.  That's just my opinion on how I think it should be.
Apr 23, 2008 5:40 pm

Old Spice,

They are not going to shackle you and throw you in jail.  They will send a letter re-stating the non-solicit clause in the agreement.  If you comply with it, fine.  If you start doing shady things like sending pre-filled ACAT's or something, they might send the TRO or get more aggressive.  But if you follow what your legal council tells you, and your new firm supports you (financially and legally), you will be fine.   So go finish senior year and stop worrying about what might happen if you might decide to leave somewhere down the road.
Apr 23, 2008 6:50 pm

haha, good point.  The whole thing got blown out of proportion.  I was just saying from what I’ve read it kind of sucks.  Anyway, I gotta get to class.  jk 

Apr 23, 2008 9:40 pm

That’s true.