The most important and most difficult contractual provisions to negotiate in any broker or financial advisor’s employment contracts are not the salary or commissions to be paid by the brokerage firm but the non-competition and non-solicitation provisions buried in the fine print of employment agreements. The terms of up-front bonuses coupled with forgivable loan and/or promissory note provisions are not for novices. These contractual provisions are often not mentioned in the negotiations and go unnoticed until you or the firm terminates the employment relationship, rightfully or wrongfully.

It pays to have skilled counsel when negotiating these provisions, and it certainly pays to have an experienced trial lawyer when the brokerage firm attempts to enforce them upon your departure. The Law Offices of Robert Wayne Pearce, P.A. has advised brokers and financial advisors on negotiating these contract provisions and defended them when brokerage firms have attempted to enforce unjust contracts with their former registered representatives.


Brokerage firms typically use restrictive covenants to bind new and experienced brokers in the industry as part of their “transitional compensation” in employment agreements. These provisions can restrict your ability to take a future position at another firm within a certain geographic area or for a certain period of time and effectively prevent you from contacting and/or doing business with clients that you cultivated and serviced for many years. Some of these provisions require the reimbursement of training costs and make an early departure from an unpleasant employer financially impossible. Other brokerages incorporate provisions with consents to the issuance of a temporary restraining order, preliminary or permanent injunctions that will prohibit any form of competition with your old employer, and solicitation of your oldest and best clients. These restrictive covenants must be reasonable in time, distance, the definition of a “customer,” “solicitation,” etc. The best defense is to avoid them during the negotiation of these provisions. Thereafter, they can only be defended with the help of skilled and experienced employment litigation and arbitration lawyers. Mr. Pearce has over 40 years of experience in the negotiation and defense of these matters, and he will do his best to not let brokerage firms handcuff your career.


For years, and until this day, brokerages recruit employees from each other resulting in court litigation and arbitration proceedings causing the firms hundreds of millions of dollars in attorney fees and other expenses over the years. However, many firms have entered into a truce and signed a treaty known as the Broker Recruiting Protocol promising not to sue one another or the brokers who changed firms on the condition that the broker and firm complied with all of the terms of the Broker Protocol. 

The essential terms of the agreement include the departing broker’s hand delivery of: 1) a written resignation letter to the branch manager where he/she works; and 2) a detailed list of the clients he/she intends to contact and solicit to take with him/her, including the account names and titles, account numbers, address of the client, phone number of the client, and the client’s email address.

The broker is allowed to take that list without the account numbers to the new firm after he/she has delivered the written resignation letter and delivered the list described above. The broker that left the firm can go without fear of any lawsuits being filed against the recruiting brokerage firm or him/her for violation of any non-competition or non-solicitation agreements.


Many experienced brokers and financial advisors receive transitional compensation upon becoming employed at a new brokerage firm. The amount of the bonus is usually dependent upon the brokers “trailing 12” months of revenue he produced at his prior employer. Some bonuses are enhanced by the amount of client assets the broker causes clients to transfer when they open accounts with the new employer and the amount of commissions generated in those new accounts in a certain period of time. These bonuses are usually coupled with promissory notes or forgivable loan agreements with terms where the amount of the up-front bonus is reduced and reportable as income on a monthly or yearly basis. 

Unfortunately, many of these agreements are never negotiated by brokers and financial advisors to exclude repayment by reason of death, disability, or termination without cause. You should not be required to repay the bonuses when your employment terminates involuntarily or without cause. It takes skillful attorneys to read and understand the fine print of these agreements, to prevent overreaching and other misconduct by the brokerage firm, and to assert the defenses necessary to avoid repayment of those bonuses. Our attorneys will review agreements with prospective employers and advise you beforehand about your rights and, if necessary, assist you in avoiding payment when it is unjust.

LOOKING TO LEARN MORE: Click here for related articles about Employment Contracts.

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The Broker Protocol will not prevent suits or arbitration claims being filed against brokers to collect unpaid portions of up-front bonuses, forgivable loans or promissory notes when they terminate their employment and move to another firm. These collection actions are difficult to defend unless you have a separate claim against the brokerage firm for its breach of contract, fraud or other misconduct. Most of these claims or counterclaims do not have much success for good reason. Brokers need a strong claim or counterclaim to set off against the unpaid balance of that promissory note, bonus agreement, forgivable loan, or employment agreement. 

An example of a good case would be where the broker, prior to his employment, has memorialized, in writing, either in the form of correspondence or emails, the false promises or promises that were simply not fulfilled, and/or makes a claim for fraud. The broker must act on that claim quickly; generally within a year of joining the new firm. 

Post-termination defamation claims can constitute a good set-off claim or counterclaim. For example, a broker leaves the firm, he owes money, and as soon as he leaves the firm, the brokers at the old firm and their sales assistants are on the line with the departing broker’s best customers. The old firm maybe even telling all sorts of lies about the departing broker, hopefully sent by email. The email coupled with the departing broker’s former customer’s testimony: “If they hadn’t told me those lies, I would have transferred my account,” will give any broker a good argument for set-off.

There are other ways that you can make set-off claims or counterclaims. They are very difficult, but they are not impossible. Usually, the better course in these situations where the claim or counterclaim is weak is to try to renegotiate with the brokerage firm recently departed; attempt to renegotiate the terms of the promissory note, possibly making them less onerous by lowering the payment or extending the time period to repay the bonus. You might even be able to negotiate a reduction in the amount owed by making a lump sum payment.

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