With more representatives being wooed away from investment firms lately, there's greater emphasis on establishing enforceable agreements on who owns a book of client business.
Dennis Egan and James Giszczak, attorneys with Butzel Long in Ann Arbor, Mich., who have defended credit union and bank investment programs, spoke on risk management issues at NACUSO's recent annual conference yesterday. When an investment representative leaves a credit union's program with little to no advance notice, having a previously deployed account retention strategy in place can save a lot of grief, they said.
Giszczak said the time to start having discussions about what happens to the book of business should a rep leave is before bringing them on board. That includes identifying those assets that should be protected, have an enforceable agreement and should a rep indeed leave, doing quick analysis to determine whether there's been any theft of breach of contract.
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"One of things [credit unions] have to be aware of is taking extra precautions to make sure member information is not breached," Giszczak emphasized.
Egan said if a rep has built a good business and is adding $5,000 or more in revenue, he or she will likely be a highly-sought candidate by other firms. Both attorneys acknowledged given the flat markets and weak revenue reports, reps are more inclined to seek out career opportunities beyond their current employer.
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