In the past several weeks, Mariner Wealth Advisors has been hit by multiple lawsuits filed by a trio of competitors, including Edelman Financial Engines, Avantax and RWA Wealth Partners, accusing Mariner of aggressive recruiting tactics that fall outside the bounds of normal business.
Though the details of each suit differ slightly, all claim Mariner lured away the firms' advisors, helped them break confidentiality and non-solicitation agreements and spilled trade secrets in the process. Edelman's suit accuses Mariner of a “calculated campaign” to harm the business.
The rapid number of lawsuits, filed in short order, reveals tensions simmering below the traditionally friendly RIA business landscape and prompted many observers to wonder what happened with Mariner to quickly become the legal target of rivals. Have the firm’s aggressive growth strategy spiraled into illegal business practices, or are the rival firms just lashing out at a competitor that seems to be winning the talent war for prized advisors at their expense?
Read the Lawsuits
Typically, when an advisor leaves a firm and that business believes the advisor has violated non-solicitation agreements, the firm will sue the individual advisor, not the firm they joined. Generally, the firm is named as a defendant if the plaintiff believes the firm is "aiding and abetting" that advisor, as Edelman, Avantax and RWA claims in the Mariner lawsuits.
The conflicts partly stem from Mariner’s stated strategy to undergo a "humongous growth phase,” according to Max Schatzow, an attorney and co-founder of RIA Lawyers who is not involved in the suits.
Court actions like these could be inevitable with a firm expanding at Mariner’s rate, which currently stands at $112.3 billion in assets under advisement (and $94.8 billion AUM), and over 1,500 advisors, Schatzow said.
“Anytime you’re onboarding advisors, there’s risk, and this isn’t a small organization anymore,” he said. “Part of it is just a numbers game and comes with the territory.”
Brian Hamburger, the CEO of MarketCounsel and the head of the Hamburger Law Firm, said his firm has noticed a growing trend of recruiters not just bringing on board advisors from rival firms, but taking an active hand in helping those advisors who violate employment agreements; that may include collecting the advisors' signed employment documents, such as non-solicitation contracts, and creating legal strategies to invalidate them. He said the Mariner suits demonstrate the need for recruiting firms to remain “at arm’s length” when it comes to a departing advisor’s solicitation of clients. Hamburger said kind of recruiting activity could come very close to actively facilitating an advisor's choice to break a contract.
“When you see that, what scares us is that it could give rise to a claim of tortious interference, and an overt effort to encourage advisors to breach their legal obligations to their current employer,” he said. “And that’s something we work really hard to try to avoid.”
Mariner Wealth Advisors was founded in 2006 and is helmed by CEO Marty Bicknell. It has become one of the largest independent RIAs in the country largely through active participation in the RIA M&A market. In January, the firm acquired a Calif.-based $360 million RIA, launching Mariner’s 15th office in the Golden State, and 99th nationwide.
The $250 billion-AUM Edelman Financial Engines filed its suit against Mariner in November, accusing the firm of luring away about 10 advisors from that firm and incentivizing them to break their employment contracts. In total, Edelman claimed to have lost about 851 clients representing about $621 million in assets
Edelman argued that Mariner had engaged in “a prolonged pattern of deceptive actions used to steal (Edelman’s) confidential and proprietary business information.” Edelman’s also in the midst of arbitration proceedings with several of the departed advisors.
Mariner struck back in December, accusing Edelman of waging a campaign to “unlawfully stifle fair competition.”
Mariner Wealth Advisors CEO and President Marty Bicknell
While a recruiting firm may be aggressive, it steps over a line when it actively encourages a breach, according to David Abell, an Albuquerque, N.M.-based managing attorney at Abell Law, who often represents advisors moving between firms. Edelman accused Mariner of doing just that, though he acknowledged that much of the suit depended upon making assumptions based on the facts.
“There’s nothing illegal about breaching an agreement; it’s an economic decision,” he said. “But if there’s a concerted effort to raid a firm as they’re alleging, then Edelman may have a claim, if they can prove it.”
Avantax, a tax-centric planning firm with some $43 billion in AUM and almost an equal sum under administration, filed their suit against Mariner earlier than Edelman, bringing it in Iowa state court last fall before being bumped up to federal court this month. Mariner and advisor Michael Carignan were named as defendants. Avantax was acquired by Cetera Financial Group late last year.
In the suit, Avantax claims after Carignan left he broke the terms of his restrictive covenants with Mariner’s “support and encouragement, and all with Mariner’s knowledge that such activities are contrary to Carignan’s contractual obligations owed to Avantax,” the Iowa District Court complaint read.
RWA Wealth Partners went even further, accusing Mariner of directing advisor Brendon Berman to act as their “secret agent,” allegedly pilfering the client lists and trade secrets of his employer, Polaris Wealth Advisory Group (Adviser Investments bought Polaris in 2022, with Adviser later changing its name to RWA Wealth Partners).
“This case involves a clandestine scheme in which (Mariner) sought to obtain an unfair advantage in the wealth management industry by destabilizing the contractual relationships of a competitor, stealing its proprietary information, and accessing its computer data and network without permission—all to gain an unlawful leg up in the industry the easy way: by cheating,” the complaint read.
According to the complaint filed in Los Angeles Superior Court, RWA’s attorneys claimed to have a digital paper trail (and a confession from Berman) indicating that Mariner was “heavily involved” in mining the advisor for details and preparing him to steal Polaris’ clients in 2022.
$15 billion-AUM RWA argued Mariner was well aware Berman was “poisoning Polaris’ relationships with its clients,” and even coached Berman on how to do it.
RWA also claimed Berman had clandestinely formed a client list filled with proprietary Polaris information he called “The List,” Instead of rejecting the information, Mariner allegedly accepted the so-called list knowing it was illegal for Berman to have taken it outside the company.
“This is not the first time (Mariner has) played this illicit gambit,” the complaint read.
Attorneys for RWA did not return a request for comment. Mariner declined a request to comment on this story.
Abell claimed that naming firms in these kinds of suits was relatively uncommon, and said the requirement for sufficient grounds to file a suit like this suggested the plaintiffs could have a case.
“So, the fact that multiple firms are making these allegations might indicate there’s a pattern,” he said. “Then again, maybe Mariner’s recruiting efforts are just very successful, so they’re exposed to these kinds of allegations and they may not be true.”
There’s little doubt Mariner’s been pushing an aggressive growth strategy.
During a September 2022 panel at Echelon Partners’ Deals & Dealmakers Summit in Chicago, Cheryl Bicknell, Mariner’s then-COO and chief strategy officer, said the firm intended to bring on more than 4,000 new advisors in the next four years, mostly via the firm’s independent contractor affiliation model. At the time, Bicknell claimed Mariner had more opportunities under letter of intent than at any time in the firm’s history.
Mariner has also benefited from an influx of private equity capital; in 2021, the Los Angeles-based PE firm Leonard Green & Partners acquired a minority stake in Mariner, promising to invest “significant capital” into the firm to boost its growth nationwide.
Penfund, a Canadian-based PE provider, injected $75 million in second-lien and delayed-draw debt investment to Mariner the following January; the money was to fund “Mariner’s acquisition pipeline” and corporate needs, according to Penfund. Funding from private equity investors often comes with expectations for accelerated growth.
Although PE support and the multi-year expansion of the RIA space may put pressure on a firm like Mariner to grow quickly, it also means it's large enough and capitalized enough to wage battles in the courts, Schatzow suggested. These kinds of legal feuds are more routine among larger corporations, and indeed were commonplace among the Wall Street brokerage firms in past eras.
Some firms may try to avoid these kinds of legal challenges by only recruiting from firms that adhere to the Broker Protocol, while others leave open the option of cutting ties with a recruited advisor if the firm itself is targeted in a lawsuit.
"Especially for smaller RIAs, because most just don’t want to deal with the litigation cost,” he said. “But Mariner’s pretty well-funded now, so they’re saying ‘we’ll take our chances, pay your defense costs and see where the chips fall.’"
Hamburger agreed that the frequency of litigation against Mariner raises the question of whether the firm has institutionalized a strategy, approved from the top, to step up to, if not over, the line with the understanding that litigation costs and fallout are simply a matter of doing business. But he didn’t rule out the possibility Mariner was simply winning the war for talent with a more tempting offer for advisors and the plaintiffs are simply trying to stop the bleeding.
“Just because a firm is successful in their recruiting efforts doesn’t necessarily mean they’re going about it the wrong way,” he said.
