Starting a new job can be very exciting, but it can be nerve-racking too. Not only do you have to think about keeping your book intact, but there’s also the persistent fear: Will I be sued? Of course there are no guarantees, but here are some pointers to help keep you on solid legal footing as you change jobs.

Know what you’ve signed.
Many brokers don’t have a copy of their employment agreement and have no idea what it says. This can make leaving much trickier. If you don’t have a copy, try to get one from someone who joined the firm around the same time you did. The agreements typically don’t change much from year to year, and it’s important to know what you agreed to, especially when it comes to non-compete and solicitation clauses. If you can’t get hold of an agreement, plan for the worst case scenario, which is that the firm will severely restrict your ability to solicit clients and provide services to clients after you’ve left, said Peter A. Savarese, general counsel with National Compliance Services Inc., a Delray Beach, Fla., consulting firm that works with advisors and broker-dealers. And when you join your next firm, make sure you keep a copy of this critical document.

Know what you owe.
When they leave many reps still owe money to their firms as a result of the large sign-on bonuses they received in the form of forgivable loans. Typically these loans are forgiven in stages over a period of years, but if you leave prematurely, the firm can demand full payment. What happens if you no longer have the money? Or you’re being asked to pay it back over a time frame that doesn’t work for you? “People who have these obligations need a realistic expectation of what would need to be paid back and on what terms,” said Patrick J. Burns, Jr., an attorney in Beverly Hills, Calif., who helps advisors go independent.

Be aware of your firm’s privacy policy and what it says about contacting clients after you’ve left.
A lot of reps assume that their clients’ information belongs to them so they want to take documents such as account statements and more. But the courts have deemed the information belongs to the clients and firms, not the advisor. “You can’t walk out with boxes full of account documents,” said Daniel Bernstein, director of professional services at MarketCounsel in Englewood, N.J., a regulatory and compliance consulting firm.

Indeed, privacy policy violations give firms “additional ammunition to possibly be successful if they choose to sue,” Savarese said.

Plan ahead.
Many reps run into trouble because they don’t think of all the issues that can come up from both a regulatory and a business perspective. “Everything is about preparation,” Bernstein said.

Say, for instance, you want to set up your own RIA. You can’t run an outside business while you’re employed by your firm, and even setting up the entity in your name while you are employed could be a problem. Of course, there are workarounds, but the process can be complicated and requires a lot of planning. For example, you may have someone else form the entity for you such as a friend or a spouse. If you’re part of a group, someone could leave first to handle all the leg work. “The less that the individual who is employed is involved the better…but it’s not always easy,” Bernstein said.

When you are planning a move, it’s also best to keep things as quiet as possible because things have a way of getting back to employers. Be careful of water cooler talk and even telling people at the firm you’re very close to and might want to take with you. “You can find yourself out before you’re really ready to go,” Bernstein said.

Another thing to consider is how much risk you’re willing to take. Do you want to risk violating your employment contract and take the chance you’ll be sued? Or do you want to make sure you never get a letter from an attorney telling you you’ve done something wrong?

Know whether the firm you’re joining has signed the broker protocol.
If it is, you’ll likely have an easier time transitioning clients. The pact stipulates that signatory firms will refrain from taking legal action against advisors who take basic client data with them when they move to another signatory institution. While the agreement doesn’t cancel out any of the privacy regulations, it may negate the non-solicit clauses you signed.

Approach clients with caution.
While you might be tempted, don’t tell clients in advance that you are leaving. Doing so has lots of potential downsides. For instance, you could be violating common law duties owed to your employer or breaching the terms of your employment agreement, thereby increasing the odds you’ll be sued.

To be sure, there are ways to maximize client retention, but you have to go about it tactically. “There are all kinds of strategies that can be utilized, but the worst part is taking for granted, or underestimating, the adverse consequences of not doing it property or without a strategy in place,” Savarese said.

Even after you leave your firm, contacting clients can be tricky. Every state, for example, has different employment regulations which define what soliciting means. Some allow you to do some type of tombstone ad, for example, while others are more or less restrictive, Bernstein said.

Get a good lawyer
While having an attorney doesn’t eliminate the risk of getting sued, it can be invaluable in trying to wade through the murky legal waters. It is particularly important if you’re a big producer, since the larger the book, the more potential there is that you’ll be sued. Firms are “going to miss the bigger producer more than the smaller producer,” said Burns who heads the firm in Beverly Hills.

Good legal advice is also especially important if your employer has a reputation of going after advisors who leave. If that’s the case, “the red flag should be up, and [advisors] need to be very sensitive to their approach with regard to their potential departure,” said Jeffrey Morton, a partner with the Washington-based ACA Compliance Group. “Getting experienced and competent counsel and advisors involved is invaluable to the process.”

Commentary by Susan Antilla

June 3 (Bloomberg) — You know things are getting back to normal in the markets when a brokerage firm shamelessly touts the arrival of a new recruit whose claim to fame isn’t that he has an M.B.A., or even that he’s good at making money.

Morgan Stanley has a new guy who set the National Football League record for the most receptions by a wide receiver in his first two seasons. Hey, isn’t that a reason to hand money over to a stockbroker?

The company said on May 27 that it had hired Wayne Chrebet, formerly of the New York Jets, to be a financial adviser in its Red Bank, New Jersey, office. In its 11-paragraph press release, the firm ticked off his NFL accomplishments, his charitable work (which is significant), his degree in sociology, and his awards. Nowhere, though, did it say anything about why Chrebet, who sounds like a decent enough guy, would be a good pick to manage an investor’s money.

The question of “What’s in it for the customer?” is so silly that Morgan Stanley spokeswoman Christine Pollak said she would have to check and get back to me. But let’s not pick on Pollak; it’s an open secret on Wall Street that the people who handle customers’ accounts are often hired for reasons that have nothing to do with their ability to look after a nest egg. You can’t blame her that the industry-wide system is driven by sales first, competence second. Or third. Or not at all.

Network of Pals

What does count in a new stockbroker is the ability to tap pals and former associates who have big bucks to open an account, and that’s something that guys such as Chrebet are well equipped to do, says Art Romero, who recruits stockbrokers for firms, including Smith Barney and Morgan Stanley.

“Any company would love to have a professional athlete on the payroll,” he says.

It works that way partly because athletes who make multimillion-dollar bonuses feel more comfortable entrusting their money to one of their own, Romero says, so making a hire like Chrebet is a coup.

Mere mortals outside the sports world with only a million or so to spare are also attracted to big sports names, says Kenneth L. Shropshire, professor of business ethics and director of the Wharton Sports Business Initiative. Brokerage firms know well that there’s a chunk of the investing public uncontrollably prone to name-dropping. Give them a broker with a sports background, and they are off to their next cocktail party blabbing about Joe Jock.

‘My Guy’

“There is some group of people who want to say ‘This is my guy,” Shropshire says.

Jocks who go into the investment business don’t necessarily do a bad job; it’s just that name-dropping is a stupid reason to pick a broker. Or maybe not. If “your guy” was a former California State baseball star named Salvatore “Sam” Favata, you now have cocktail-party bragging rights to knowing Prisoner No. 43941-112 in the Lompoc Federal Correctional Complex in Lompoc, California. Favata, a former president of the private money investment division of the now-defunct National Consumer Mortgage of Orange County, California, pleaded guilty in 2006 to defrauding investors of more than $30 million in a Ponzi scheme.

Then there’s Lenny Dykstra, the former New York Mets and Philadelphia Phillies player who became such a hit with the public as an investment expert that he started a column in 2005 for Thestreet.com, was hailed as a “fledgling guru” by Fortune magazine in 2006, and started an investment magazine for athletes last April.

Dykstra’s Lawsuits

Today, he is behind on payments on the California mansion he purchased from Wayne Gretzky, according to news reports, and he’s dealing with lawsuits from his airplane pilots, people involved with his magazine, and Oppenheimer & Co., one of his brokers. His magazine was shut in November. Thestreet.com replaced him in April with Jon Najarian, another sports guy (former middle linebacker for the Chicago Bears). And presumably, his dopey followers have moved on to some equally unfit investment superstar.

At Morgan Stanley, Pollak did get back to me to delineate Chrebet’s qualifications. “I can tell you that over the last six months, he’s been with the firm and he has received all of the appropriate and required licensing and training, officially becoming a financial adviser on the 22nd of May,” she said. Chrebet himself wasn’t available for comment, Pollak said.

Shropshire, the Wharton professor, says you don’t have to be a jock to wreck a portfolio; and, who knows, maybe Chrebet will be the next Warren Buffett. Still, the sports-star-turned- broker phenomenon reminds Shropshire of the same “in crowd” mentality that drew some investors to sign up with Bernie Madoff.

If the best argument for hiring a broker is that he’s a star at something other than making money, watch his videos on youtube.com and make a contribution to his favorite charity.

(Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.)

Ways to ace your phone and in-person interviews in a competitive finance industry. - TheLadders Staff

Considering the state of the finance industry, every competitive edge counts when you’re preparing for that interview. Recruiters and job seekers offered TheLadders insights into the dynamics of interviewing in finance today.

Art Romero is managing director and owner of The Academy Group which is based in Denver but works with finance clients nationwide. He’s both self-effacing and assertive about the importance of his discipline to finance job seekers in a tight market. “Certainly, it’s biased. Being a recruiter, of course I’ll say that the best way in a door is through a recruiter,” said Romero. But the obvious dynamic – that the finance market is shrinking and the pool of candidates is growing – means that any company with an opening will be flooded with thousands of resumes. No hiring manager has the time to go through all of those, so they hire recruiters to weed through them.

“They want a recruiter to hand them the perfect candidate on a silver platter,” Romero said.

Making the right approach to the hiring manager is also key, according to “Esther,” a member of TheLadders who is using the service in conjunction with her networking skills to find a new job as a lawyer in financial services.

“I try to read between the lines and see what they’re really looking for, beyond the bullet lists of requirements, and analyze what that implies for the firm,” Esther said. “My approach is to create my own job by understanding what they really need, then showing them how I can add value.”

Mr. Romero extends that advice to the initial phone interview with a recruiter. “Too many candidates take these too lightly, either taking them on their cell phones with spotty reception or while they’re running an errand. You need to convince me that you’re a good person for me to put in front of my client; that you’re not going to make me look bad. Not taking this call seriously is not going to do that,” said Romero.

A few more basic reminders from recruiters who work in finance:

“Very often [candidates are] more interested in tooting their horn or beating their chest and regaling the interviewer with their accomplishments in regards to the positions that they’re going for, when they may not relate to the role at hand.”– Harold Laslo, a staffing specialist at the Aldan Troy Group in New York
“One mistake that’s happened a couple times is that when they get to the final interview — which is often just a formality — candidates assume the job is already theirs. Instead of asking about perks, they’re joking about the accommodations they were put up in. By not fighting for the job, they don’t get it.” – Art Romero

“I remind them not to interrupt, don’t tap your pen on the desk, don’t insert the person’s name into your answers and don’t hang yourself — if you’re asked what time it is, don’t tell them how to build a watch. Common-sense stuff, but it gets forgotten.”– Sherry Brickman, a partner at Martin Partners near Chicago
“Candidates sometimes forget certain skills, especially if they’ve had a long history with the company they’ve been with.” – Sherry Brickman

“A candidate should have some knowledge about the company where they are interviewing. Previously, this information wasn’t as attainable as it is now. To walk in totally unprepared at a senior level is very harmful when you could have gone to their Web site and gotten a minimal amount of background information about them.” – Harold Laslo

I wasn’t there, but I can imagine the thought process of Captain “Sully” Sullenberger on US Air Flight 1549 went something like this:

1. bird strike, one engine out… Crud! Fly the airplane.. engine number two out.. more Crud! Fly the airplane.. keep wings level… AVIATE… check!

3. call the controllers and let them know what I’m doing. Alert the crew and passengers.. COMMUNICATE.. check! Now fly the airplane and land.

Which, as we know, he successfully accomplished.

Being a Financial Advisor in today’s turbulent times also requires a similar check list. The last course of action you want to take right now is one of panic and confusion. You’ll lose your passengers (clients) faster than Captain Scully can say, “check!” Instead, follow what he did.

1. FLY the airplane. Remain calm in your approach to financial management of your clients and don’t make any abrupt moves that would cause your aircraft to lose control.

2. NAVIGATE your career and the safety of your client’s portfolios. Now is a good time to re-evaluate your landing spot. Will you remain where you are right now or should you consider other “landing” options? Where do you want to take your passengers for a safe landing? If your current company is not a safe place for them, start considering other options.

3. COMMUNICATE your intentions to your clients. Whether you decide to stay where you are presently, or if you are considering other options, tell your clients now so that they are comfortable knowing that you are in control. I remember reading that one of the passengers from flight 1549 said that when he heard the Captain announce that they were going down and to prepare for a hard landing, he knew he was going to be alright because his captain sounded very confident and reassuring.

Be that Captain to your clients. They need you now more than ever…

Subaru posts 2008 sales increase in US

CHERRY HILL, N.J. – Subaru said Monday its U.S. sales crept higher in 2008 on strong demand for Forester and Impreza models. The Japanese company is the only major automaker so far to post an increase in yearly sales.

Subaru’s December sales fell 7.7 percent to 17,287 units from 18,739 in December 2007, as a big increase in Forester sales failed to overcome declines in its remaining models.

But Subaru sales for all of 2008 rose by 0.3 percent to 187,699 vehicles from 187,208 in 2007, as consumers snapped up its top-selling Forester and Impreza models. The company is likely to be the sole large automaker to report higher sales for 2008, as the troubled economy pummeled new car sales across the industry.

Yeah, you read that right - Subaru actually sold more cars in 2008 than in 2007. (More here: “Subaru posts 2008 sales increase in US”)

Now contrast that with this little graphic from Edmunds today:

(More here: “2008 U.S. Auto Sales Are Worst Since 1992″)

Holy smokes - those are some dismal numbers.

We’ve talked about this before back in July (see “Who says the US automobile market is flat? Not VW.”) It’s just like I said back then - there are still companies - and financial advisors - succeeding even in these tough times.

So take heart in that, don’t buy into the gloom-and-doom, and realize that success as a financial advisor is still very much within your reach.

Here’s the key data from “At Least Amazon Had A Good Christmas” at Techcrunch today - take a good look at these numbers:

Peak items ordered on a single day

2008: 6.3M
2007: 5.4M
2006: 4.0M
2005: 3.6M
2004: 3.6M

Items ordered per second

2008: 72.9
2007: 62.5
2006: 46.3
2005: 41
2004: 32

Peak items shipped on a single day

2008: 5.6M
2007: 3.9M
2006: 3.4M
2005: 2.7M
2004: 2M+

You can read even more details in the official news release “Amazon.com’s 14th Holiday Season Is Best Ever”.

You already likely know where I’m going with this one, too - even in the middle of the current downturn with daily stories about one more problem or failure, money is still being spent and still being made.

I can’t possibly tell you just how proud and excited all of us who know Chris are about his selection for this position.

Please watch the following video of Chris’ remarks at the reception where the announcement was made on Friday - I think you will quickly grasp the kind of person Chris is and why he is such an outstanding choice for this role:

You can read all the details about the announcement here:

Christopher B. Howard elected as the 24th President of Hampden-Sydney College

Well, other than to say it’s nice to know there are still some stand-up people and companies who “walk the talk” and will do the right thing:

“Five-figure bonuses stun Chicago plant workers”

Ever since the Bank of America acquisition of Merrill Lynch was announced, the press has been full of stories about how all those Merrill financial advisors were going to leave in droves.

First there was all the speculation that no matter what the retention deal was when it was released, it wouldn’t be enough to keep them there.

Then after the retention deal came out a few weeks ago, the hype continued along the lines of how there was going to be a mass exodus of Merrill advisors because of the way the deal was structured, i.e., it rewarded top performers who produce over $1 million annually far more so than those under that number.

Well, guess what - it didn’t happen. Here are the key numbers from “Merrill reps overwhelmingly go for BofA deal” in Monday’s Investment News:

• 94% of financial advisors who were offered a package signed back on.

• About 6200 of the roughly 6600 financial advisors who were offered the deal took it.

• 99% of financial advisors who produce $1.75 million annually or more accepted the offer.

Read those numbers again - I’d say “overwhelming” pretty much covers it.

Some will likely quibble with that definition because, as Merrill Lynch said, “only about half of the firm’s nearly 17,000 advisors were eligible in the first place”, but, as Merrill also said, those eligible were “responsible for about 75 percent of the firm’s production”. (See “Update: 6,200 Merrill FAs Sign BofA Retention At Deadline” at Registered Rep.)

So why did so many stay? I’m no great pundit, but I think it’s a sign of the times and really pretty simple. With things being so turbulent right now, most of the Merrill advisors saw no great advantage in leaving and thought it was a smarter move to stay put.

Now that’s not to say that I don’t think it’s a smart move for some advisors, especially top producers, to make a move if the timing and situation are right - far from it. Nor do I think that this is a big sign that this is the end of top financial advisors leaving their current firms - that’s always going to go on.

No, my point is just what I said at the beginning and have been saying for some time now. Be very skeptical about any predictions you read, especially right now, and examine them closely, particularly the source of the prediction.

And if you’re someone who’s intent on becoming a financial advisor, I’d also say there are some very good lessons here, not only about the nature of predictions, but, more importantly, about what actually happened at Merrill Lynch.

He said it back in 1993, but it’s never been more appropriate than right now:

“There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.”

- John Kenneth Galbraith, Wall Street Journal, January 22, 1993

Please keep that in mind as you read the seemingly infinite number of words being written about the financial markets, “meltdowns”, recession, depression, and so on.

More specifically, don’t base your future career choices on anybody’s predictions about “what’s hot and what’s not”. I bet you can think of a number of careers that were once considered the “big thing” but don’t look so good right now - I know I can. And if you went into one of those careers not because you loved it, but because you thought you had a sure thing forever, you’re likely to be mighty disappointed right about now.

If becoming a financial advisor is what you have in your heart to do, then do it.