Bad Leaver Status
In private banking, the term “bad leaver” can strike fear into the hearts of many relationship managers and private bankers considering a career transition. But what does it mean, and how can you navigate this potential hurdle while planning your switch to independent wealth management? Let’s break it down.
What is Bad Leaver Status?
Bad leaver” refers to employees who exit a private banking firm under circumstances deemed unfavourable by their employer. As a result, the private banker or relationship manager is often restricted from retaining their clients, potentially leading to those clients being reassigned internally or moved to the desk of external asset managers (EAMs)
But it’s essential to note that this label is not the end of the world. It is often used as a deterrent, but its impact can be mitigated with careful planning and professionalism.
Why Does Bad Leaver Status Matter?
Wealth managers’ professional identity revolves around their client relationships and reputation. Being labelled a “bad leaver” might complicate your ability to bring clients to a new firm or harm your standing in the industry. However, the industry also recognises talent, and most professionals successfully transition despite this label.
Bad leaver status is not a career death sentence, primarily if you adequately protect your professional integrity and relationships.
How to Mitigate Bad Leaver Risks
If you’re planning to switch to an independent wealth management firm or another financial institution, here’s how you can proactively address the risks associated with bad leaver status:
Understand Your Contractual Obligations
Consider restrictive covenants that may affect your next career move when reviewing your employment contract. In Switzerland, these clauses are enforceable but must follow strict legal rules.
- Non-compete clauses Restrict working in similar roles within specific areas or timeframes. They are enforceable only if fair compensation and a reasonable scope are provided.
- Non-solicitation agreements: Prevent directly contacting former clients. However, this is usually allowed if you or the client reaches out as a friend and the client chooses to follow you. Document these interactions to avoid disputes.
- Confidentiality clauses: Protect your employer’s sensitive information. These clauses remain binding even after you leave.
If conflicts arise, the Swiss Banking Ombudsman can mediate. Although primarily for client issues, they also assist employees in disputes, which banks prefer to avoid due to reputational risks.
Understanding and respecting these clauses is critical to a smooth and professional transition.
Plan Your Transition Carefully
Planning is everything when transitioning to a new role. Avoid making hasty decisions that could backfire. Key steps include:
- Communicating Professionally: Provide proper notice to your employer, be friendly and follow exit protocols.
- Documenting Compliance: Keep records of your compliance with contractual obligations to defend yourself against potential disputes.
- Timing Your Move: Consider when and how you announce your departure to minimise friction with your employerb.
Focus on Your Clients
Clients are at the heart of your career in wealth management. When planning your move:
- Emphasise Client Needs: If clients inquire about your departure, focus on how the transition benefits them rather than criticising your current employer.
- Be Transparent. Before resigning, Avoid detailed backdoor solicitations or covert communications with clients. These could breach your contract and trigger harmful leaver consequences.
Leverage Industry Connections
The wealth management industry is built on networks and relationships. Maintain strong ties with colleagues, peers, and mentors who can vouch for your professionalism and integrity. These relationships can help counterbalance any negative perceptions associated with bad leaver status. Likewise, ensure that your future Swiss independent wealth management firm maintains strong relationships with custodian banks. These partnerships are essential for ensuring seamless operations and access to the best client resources, reinforcing the reputation of all parties involved.
Why Independent Wealth Management is Worth It
Despite the potential hurdles, transitioning to an independent wealth management firm can be an empowering move for your career. Here’s why:
- Freedom and Flexibility: Independent firms often allow you greater autonomy in building your practice and serving clients.
- Client-Centric Approach: You can focus solely on your client’s best interests without being tied to proprietary products.
- Diverse Opportunities: Independent platforms often offer a more comprehensive range of investment options, enabling you to provide more tailored solutions.
If you can navigate the challenges of lousy leaver status, the rewards of independence far outweigh the risks.
A Practical Example
Consider this scenario: you are a private banker with a loyal client base. You have built these relationships over years of trust and proven performance. You decide to move to an independent wealth management firm that aligns better with your values. Before resigning, you carefully review your employment contract, seek legal advice, and prepare a professional resignation letter.
You then provide appropriate notice and avoid direct solicitation of your clients. Once you have transitioned, you communicate openly with your clients, highlighting the enhanced services and flexibility you can offer.
Final Thoughts on bad leaver status
Bad leaver status can be daunting, but it doesn’t have to derail your career plans. By understanding your obligations, planning your transition strategically, and maintaining professionalism, you can mitigate risks and move confidently toward new opportunities in independent wealth management.
The key is preparation. Know your rights, act ethically, and prioritise your clients. With the right strategy, you can overcome the challenges of bad leaver status and take your career to new heights.
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