Wires recouping training costs
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I was told wires make new advisors sign a form agreeing to pay back (tens of) thousands of dollars spent on “training costs” if employment is terminated within the first few years. this is really standard practice? and does it apply even if the FA doesn’t quit but is fired? is it negotiable or mandatory?
you sure it’s not enforceable if fired? i believe it specifically says it applies if employment is terminated for any reason, by either party, voluntarily or involuntarily. seems to me that by signing something like that you’re making it enforceable in every scenario, including if you’re fired, for any reason whatsoever.
you sure it’s not enforceable if fired? i believe it specifically says it applies if employment is terminated for any reason, by either party, voluntarily or involuntarily. seems to me that by signing something like that you’re making it enforceable in every scenario, including if you’re fired, for any reason whatsoever.
Going after a fired employee would be like trying to squeeze blood from a turnip. How do you get money from someone who no longer has a job? I don’t think they would be able to legally go after you for the money if you are fired. Why put it in the contract you ask? It makes sense if it might scare someone into quitting the business if they are fired. I asked my friend who is a contract lawyer, and they said essentially that it is unenforcable. They, as an employeer have to bear risk when hiring an employee and cannot expect to repaid for training costs that were essential to them doing the job in which they hired you to do.
I would imagine they would only come after you if you get on with another firm and try to take some clients. And at that point it would be a scare tactic, because it would make more sense $ wise to pay them than to try and fight it in court.
2i, I have no idea what YOUR contract says. I have never heard of someone getting fired and the thing being enforced. I HIGHLY doubt it would stand up in court.
It is standard practice. Again, most of the big places use trainees as expendable employees. They don’t think you can make it (and it is very true). So they keep your accounts when you leave. This “contract” helps them do that.
the contract has a no solicit clause to ensure they keep your clients. the clause about recuperating training cost doesn’t seem to be for that purpose, but for the purpose of preventing you from working elsewhere in the industry. i think that is excessive.
Does any one know if this happens in any other occupation? I cannot think of any.
I think B24 and Spartacus have it. Liken it to a Non-Compete agreement. They are not gonna pay to train their competition.
do you think they’d enforce it if you left a financial advisor program to work for another firm in a different capacity, say fixed-income trader for example?
[quote=Greenbacks]Does any one know if this happens in any other occupation? I cannot think of any. [/quote]
It happens in corrugated pipe sales. I have a client who sells corrugated pipe (he’s quite good - tops in his company). But they do the same thing to him. Non-compete, non-solicit.
My buddy sells a particular service to legal firms and legal departments. He has a 1-year non-compete/non-solicit.
If you quit and go to another firm and keep your license, they WILL come after you. When I quit I got a letter in the mail from their lawyers two weeks after I started at a new firm. They ended up dropping it after I had to show them proof that there was no way I could pay them what they were asking.
That was not true in my case. I had a great relationship with my MD and he wished me well when I left, we still keep in touch. The decision came from above his management level.
If by flunking out you mean they fire you, and you go work at a bank, you are in the clear. If you just aren’t making it and leave on your own to go work at a bank and transfer your license their, more than likely they will come after you. In my case, as long as I agreed to sign a 1 year non-solicit, they dropped the whole thing. They aren’t going to persue you that hard, but just know you will most likely get a letter if you leave.