David Bach and Ric Edelman lock horns in cease-and-desist tit-for-tat

Former partners provide a blueprint for what can go wrong in a business relationship

Oct 31, 2018 @ 4:09 pm

By Jeff Benjamin

With financial services industry consolidation hitting record levels, it's only logical that breakups will also become more common, and some breakups are messier than others.

The latest example is the ongoing tit-for-tat between David Bach and Ric Edelman, two high-profile marketing powerhouses who seemingly have their horns locked a full three years after officially dissolving their one-year business partnership.

As reported earlier this week by Financial-Planning.com, Mr. Edelman, chairman and chief executive of Edelman Financial Services, sent a cease-and-desist letter to Mr. Bach, co-founder of AE Wealth Management, related to comments Mr. Bach made in an August profile.

The quotes, which have since been removed from the online story, suggested to Mr. Edelman's representatives that Mr. Bach had violated their 2015 separation agreement by leveraging proprietary information he acquired during his brief stint as vice chairman of Edelman Financial Services.

It doesn't end there, nor did it start there.

In 2015, both parties made public statements following what was described as an amicable breakup.

But the next year, Mr. Bach's lawyer sent a cease-and-desist letter to Mr. Edelman in the wake of a June 2016 article that was interpreted as being disparaging to Mr. Bach.

In response to a question about whether Mr. Bach could have become CEO of Edelman, Mr. Edelman said: "David's role was to help grow the company by generating new clients and assets. That was the purpose of that effort. Unfortunately, it didn't produce the result we were hoping for; and that's why the relationship ended."

The next shot was fired on Oct. 3 of this year when Mr. Edelman's lawyer sent a cease-and-desist letter to Mr. Bach regarding the since-retracted quote in an Aug. 22 article referencing Mr. Bach's use of "Ric Edelman's blueprint to leverage an insurance company into AE Wealth Management."

Mr. Edelman has declined to comment for this story, and Mr. Bach communicated only through his representatives.

On Friday, Mr. Bach's lawyers sent a second cease-and-desist letter to Mr. Edelman for including in the Oct. 3 cease-and-desist letter, and effectively making public, details from the 2015 separation agreement, which was supposed to be kept confidential.

A statement from Mr. Bach's spokeswoman, Jami Schlicher, said Mr. Bach "has not used any of Edelman Financial's confidential or proprietary information because, not only does he believe strongly in honoring his agreements, but he has no need of that information at his new business venture, AE Wealth Management, because it is a completely different business model than Edelman Financial."

The dispute for now is still in the cease-and-desist letter-writing stage and has not yet involved any formal legal actions. But industry consultants say it illustrates the delicate nature of partnerships.

"Having seen business partnerships come together and then break up, it always ends where it began, which means if you have an expectation at the beginning and it doesn't get fulfilled, that partnership will end on that expectation," said Angie Herbers, founder of management strategy consulting company Angie Herbers & Co.

"Think of it like having a prenup in marriage," Ms. Herbers said. "If you want to have a good breakup, then plan to break up from the beginning."

Jaded as that might sound, it is a cold reality of business partnerships to prepare for the worst, according to Mark Tibergien, chief executive of Pershing Advisor Solutions.

"I always say if you're entering a partnership, try to reverse the structure and look at it from the other party's perspective," Mr. Tibergien said. "It's always best to assume bad things will happen. So, in terms of creating agreements, you can't anticipate every scenario, but you have to anticipate that the dissolution is inevitable."

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