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Regulation and Compliance > Litigation

Empower Sues 13 Advisors Who Broke Away

By Allison Bell

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Empower Retirement has sued a breakaway advisory firm and 13 former Empower advisors who now work for it.

Empower has accused the firm, which is legally known as Atomi Financial and does business as Compound Planning, of misappropriating its trade secrets and using the trade secrets to poach its clients.

The Greenwood Village, Colorado-based business filed the complaint last week in the U.S. District Court for Colorado.

Representatives for Empower and Compound Planning could not immediately be reached for comment.

The companies: Empower is part of Great-West Life of Winnipeg, Manitoba.

It has been operating in the United States since 1906, but it began using big acquisitions to expand its U.S. retirement business in 2003. It agreed to pay $1 billion for Personal Capital, a robo-advisor with $13 billion in assets, in 2020.

Compound Planning has operations in Denver, New York and San Francisco.

Both Empower and Compound Planning offer investment advisory services, retail brokerage accounts, retirement planning, investment management, tax planning, estate planning, insurance analysis, education funding and digital wealth management, according to Empower.

The allegations: The 13 advisors who moved to Compound Planning were Personal Capital employees when Empower closed on the 2020 deal, according to Empower.

The employees could provide advisory services to individual clients as well as to participants in employer-sponsored retirement plans, and Empower provided the advisors with confidential client information to help them service the clients.

The advisor employees signed confidentiality, non-solicitation and intellectual property assignment agreements, Empower says.

Empower alleges that the former employees used trade secrets and Personal Capital brand goodwill to market to Empower clients. It cites a trade journal article quoting the firm’s CEO as saying the firm wanted to appeal to breakaway advisors who were looking for a better experience.

“‘Breakaway advisors’ is a euphemism for advisors, like the individual defendants, who can leave a firm and take clients and assets with them notwithstanding any contractual and trade secret obligations the advisors owe to their current employers,” according to the complaint.

Credit: vacharapong/Adobe Stock

Allison Bell

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