June 26, 2024
Louis Diamond Quoted
By Sam Bojarski
Advisors at hybrid RIA SageSpring Wealth Partners who want to leave the company and take their client relationships with them have to pay a price.
For SageSpring advisors, that price is typically more than two times the revenue they generate, according to sources with knowledge of the situation.
Company contracts stipulate that advisors are asked to pay SageSpring 2.5x their revenue to buy out their books of business when they exit the firm, two sources told Citywire.
A spokesperson for SageSpring has not responded to a request for comment.
RIAs, which often train new advisors and help them gain new clients through centralized lead generation engines or paid referrals programs, frequently try to protect their investments in talent through post-employment restrictive covenants like non-solicitation clauses and other means. SageSpring itself has used non-solicits in its contracts, as an April lawsuit the firm filed against departing advisor Tommy Doerfler indicates.
Industry experts told Citywire that book buyout provisions like SageSpring’s are somewhat rare among RIAs. Recruiter Louis Diamond of Diamond Consultants said: ‘Fairly few firms have a buyout provision like this.’
