The financial advisor world is a competitive landscape. Due to the number of confidential clients and trade secrets, firms are strict in implementing restrictive covenants in their employees' contracts. These agreements aim to protect the interests of the firm, the advisor and the clients. However, these constraints could also draw setbacks to financial advisors seeking to transition to a different firm. Here are three things to review in your existing employment contract to ensure a smooth transition to your new firm.

Non-compete agreements

A non-compete provision restricts a financial advisor from taking on a similar job for another company in the same industry. Employees cannot build their own firm doing the same business for a specific period or location. Simply put, if one decides to leave their company, they cannot practice as a financial advisor for a while.

Non-solicit agreements

This provision in the employment contract restricts financial advisors from asking clients and colleagues to join their new company. While advisors have an obligation to inform their clients regarding their transfer, they cannot encourage clients to shift firms. This provision protects the company's roster of clients and prevents financial advisors from poaching customers when they move to a new firm.

Confidentiality agreements

Also known as non-disclosure agreements, confidentiality agreements restrict employees from sharing proprietary information about the company. This includes trade secrets, business processes, strategies, technologies and plans.

These restrictions are tied to the information or knowledge you gained while working for the firm. This could include trade secrets, technical know-how and client information that would significantly impact the firm's position in the industry. Violation of the agreement could result in a lawsuit. It would benefit financial advisors to review their existing contracts well and understand their rights and obligations before deciding to move to a new firm. Seeking the guidance of business law attorneys would be valuable in navigating through these complex covenants and regulations.