Employee Agreements and Non-Competes: What Investment Advisors Should Know Before Starting an RIA Firm
As momentum behind the RIA model continues to accelerate, next-generation advisors and seasoned professionals alike find themselves weighing the pros and cons of launching solo practices or joining boutique firms in pursuit of greater independence and control.
For the right advisor, the benefits of starting an RIA are clear: more freedom, better client service, and the chance to build equity in your own business.
But, if you currently work at a broker-dealer or an established advisory firm, you’ll want to review your employment agreement before making any moves.
The reason for this is pretty straightforward according to John Shields, Founder and President of Advisor Guidance.
“When changing firms or going independent, you need to be mindful of both regulatory rules and any employment agreement clauses that govern how you can interact with clients during a transition. The right approach means keeping your clients and continuing your work seamlessly with them; the wrong approach means potential lawsuits and client loss.”
While these agreements can make it difficult to start your own RIA, they are not insurmountable.
To help you understand the finer points of your employment agreement, this article takes a closer look at The Broker Protocol and outlines the three key employment agreement clauses you’ll want to review before you decide to start or join another firm.
After familiarizing yourself with these elements, our team outlines specific steps you can take to ensure your next employment move is done correctly.
The Broker Protocol:
What Is It & Why Does It Matter?
The Protocol for Broker Recruiting, or “The Broker Protocol” as it is often referred is, an understanding among participating firms that provides detailed guidelines for how Registered Representatives (RRs) and Investment Adviser Representatives (IARs) can legally transition client information from one firm to another.
The Broker Portocol was established in 2004 by Smith Barney (now Morgan Stanley), Merrill Lynch, and UBS as a means to decrease the amount of litigation occurring between the firms when RRs left one firm to move to another.
Before The Broker Protocol was established, RRs of these firms and the firms they were planning to go work for were often hit with a variety of legal tactics, such as cease and desist letters and temporary restraining orders to slow the process of the RR contacting and converting their existing clients over to the new firm.
Once established, The Broker Protocol laid the groundwork for specific standards and rules that need to be followed to take advantage of the protections it offers and avoid litigation and potential liability issues when RRs take certain client information with them when they leave one firm for another firm.
Although The Broker Protocol was originally designed for broker-dealers and their registered representatives, more and more registered investment advisors (RIAs) are adopting it, often to facilitate their transition to independent firms from a broker-dealer or another RIA.
How the Broker Protocol Works
Both your current firm and your new firm must be members of The Broker Protocol for these rules to apply.
As a first step, you should check to see if your current firm and new firm are Broker Protocol members. As of November 2025, there were over 2,500 member firms. J.S. Held administers the Protocol and maintains a full list of member firms on its website.
Once you’ve identified your current and new firms as members, you will be able to take specific client information with you once you successfully transitioned to your new firm. This information is limited to:
- Client Names
- Mailing Addresses
- Telephone Numbers
- Email Addresses
- Account Titles
If you are planning to start your own RIA and you know that your current firm is a member of the protocol, you will need to sign the joinder agreement on behalf of your new firm to become a member of the protocol. There is nothing in the protocol or from a regulatory perspective that explicitly prohibits you from signing the joinder agreement before your new firm is registered; however, you must have your business entity established.
Top Broker Protocol Concerns for Advisors
While The Broker Protocol is designed to reduce litigation between firms and make it a little more user friendly for advisors to switch employers, there are some limitations in the protection this protocol provides.
The three most common areas for concern that Advisors need to be aware of are:
- Not All Firms Participate:
If you are working at a non-participating firm, you will probably encounter stricter data and client retention policies. Here, knowing and understanding the restrictive covenants of your employment agreement is paramount. You may be contractually prohibited from taking any confidential firm information. Indeed, the wisest course of action may be to take absolutely nothing – no names, telephone numbers, and email addresses. A non-solicitation clause may also prohibit you from contacting your clients for a certain period of time – months or even years.
- Client Reassignments Are Possible
Once you announce your decision to make a move, your current firm will probably look to immediately reassign your clients as a means to protect themselves from your departure. This may happen even if you are with a protocol firm. This is all the more reason why it’s important to carefully examine your client list before making the decision to start your own RIA or join another firm. While you can never be 100% certain whether a client will join you at your new firm, you can be certain your current firm will make it a lot harder on you.
- More Restrictive Policies May Be Enforced
Firms that have opted out of the Broker Protocol typically impose stricter contractual and legal restrictions on departing advisors, significantly complicating efforts to retain or communicate with clients after a move. These restrictions may include non-compete, non-solicitation, and non-accept clauses. We take a closer look at each of these below.
Know Your NCAs
In the spirit of mitigating risk, firms often include three clauses in employment agreements:ce, non-competes, non-solicits, and non-accepts (collectively known as “NCAs”). These clauses are designed to reduce the risk of losing clients and revenue.
Comprehensive Non-Compete:
This type of non-compete is designed to be all-encompassing. The intent is to prevent RRs from continuing to work as financial advisors — or offering similar services — for any firm that competes with their former broker-dealer. However, on closer examination, nearly all advisory firms can be seen as competitors, effectively barring advisors from using their professional skills. Because such restrictions severely disrupt an advisor’s ability to earn a living, comprehensive non-competes are often difficult to enforce.
Non-Solicit:
This kind of agreement allows RRs to gain the benefits of complying with the protocol, so long as they do not directly solicit the clients of their original broker-dealer or RIA. The agreement may include clauses prohibiting a departing advisor from contacting their clients for a specific period of time, or they may be barred entirely from soliciting clients of the firm. However, the benefit of a non-solicit clause is that an advisor may be permitted to access the client’s business if the client finds them organically, say through an internet search or door-to-door mailing announcing the new firm.
Non-Accept:
This kind of non-compete provides the advisors with a specific list of clients for whom they are, and are not, allowed to offer advice. This is almost always regardless of how you’ve sourced these clients. Even if you haven’t directly solicited their business, by contacting the clients directly or indirectly, the non-accept agreement bars a RR from accepting the clients’ business.
What to Do Before You Leave
If you’re considering the leap to join a new firm or to start your own firm, follow these steps:
- Get Expert Support. Transitioning under the Broker Protocol demands careful adherence to its guidelines. Hiring a good securities attorney and compliance expert helps ensure that each step aligns with protocol requirements and minimizes the risk of regulatory issues or litigation. They can interpret the terms of your employment contract, evaluate potential liabilities, and provide guidance to help you navigate a smooth, compliant transition.
- Document your client relationships. While you may not be able to take client data, having a clear understanding of who you serve and how you acquired them is useful in any legal review.
- Avoid digital footprints. Don’t email yourself client info, use an office printer to print client lists, or use work devices to research your RIA plans—these actions can be used against you.
- Start planning early. It can take several months to properly form your RIA, register with the SEC or state securities agencies, and set up compliance procedures.
Communicate with clients as soon as possible. Once you have the necessary permissions, begin reaching out to clients to inform them of your transition. Clear, proactive communication helps reassure them that their needs remain a top priority. Rather than sending a generic message, tailor each interaction to the individual client—acknowledge their specific concerns, highlight how the change will benefit them, and emphasize the consistency they can expect in your services moving forward.
Final Thoughts
The RIA space is more accessible and attractive than ever, but independence comes with responsibility. The decision to leave a broker-dealer involves legal and professional considerations. Reviewing your contract and preparing properly can mean the difference between a clean break and a career-complicating lawsuit.
With over 1,000 new RIAs formed in the last year and private equity interest accelerating, there’s never been a better time to go independent — just make sure you do it the right way.
