A Montana-based advisor who recently joined Mariner Wealth Advisors is suing her prior employer, Avantax, to break contracts she argues are “vague, overbroad and unenforceable.”
Molly Nelson claims the agreement she signed while working at Avantax and its in-house RIA, Avantax Planning Partners, bar her from working in the industry for two years, or accepting any business from former clients, even if she does not solicit them.
Nelson entered the industry in 2006 at Pruco Securities, according to her BrokerCheck profile, with multi-year stints at Cetera and LPL Financial. According to her complaint, Nelson entered an agreement when she worked at Honkamp Krueger Financial Services (HK), which was later acquired by Avantax and rebranded as Avantax Planning Partners (in 2022, Blucora rebranded itself as Avantax).
The complaint argues that the two-year non-solicit provision HK had in place was too burdensome.
Molly Nelson
“The Agreement Ancillary Client Non-Solicit purports to nonsensically restrict Nelson from soliciting ‘any client, account or location’ of Avantax,” the complaint read. “It is unclear how Nelson could possibly solicit a ‘location’ of Avantax, be restricted from doing so, or have any idea what that restriction means.”
From how Nelson read it, the contract meant she couldn’t solicit or even accept business from any client she interacted with during her employment, regardless of how she met that client, whether that client did business with Avantax, and whether that client might want to continue working with her.
When Blucora acquired what is now Avantax Planning Partners, she signed a revised agreement, which was even more suffocating, Nelson claims. The new version kept the previous restrictions in effect, but purportedly added a non-compete clause, disallowing Nelson from being employed by or doing business with “any competing business within the United States” for two years.
Nevertheless, on Jan. 18, Nelson quit Avantax and moved to Mariner Wealth immediately. She warned the court that she anticipated some of her Avantax clients would want to follow her to Mariner, even without her solicitation of them.
Avantax declined to comment, citing a policy against speaking about pending litigation.
Though Mariner Wealth is not named as a party in the complaint, the firm has been a player in several court disputes in recent months.
The firm is currently locked in a legal skirmish with Edelman Financial Engines, which is accusing Mariner of a “calculated campaign” to entice Edelman advisors to leave the firm while taking trade secrets and breaking confidentiality agreements in the process. (Mariner argues Edelman is attempting to “unlawfully stifle fair competition” in the industry.)
In an unrelated case, Avantax is suing Mariner Wealth and advisor Michael Carignan, arguing he broke his restrictive covenants and unlawfully solicited the clients of Avantax, his former employer. The suit recently landed in Iowa federal court after first being filed in state court last fall. Additionally, Mariner was accused of poaching clients and pilfering client data when advisor Brandon Berman left Polaris Wealth Advisory Group, according to Financial Advisor-IQ.
