A legal spat between retirement plan provider Empower and 13 of its former advisors is coming to an end, with the parties arriving at a settlement agreement.
The dispute was sparked by the advisors’ departure to establish Atomi Financial, a rival advisory venture, which Empower alleges leveraged confidential information to gain an unfair competitive advantage.
Empower, whose parent is Great-West Lifeco US, boasts a robust profile in the retirement planning space, with products and services aimed at small businesses as well as a mammoth shelf of retirement investment solutions for DC plan participants. With roots going back to 1891, its US footprint covers more than 17 million individuals and over 69,000 organizations.
In 2020, Empower acquired Personal Capital, which provided both digital and online advisory services, for $1 billion. All 13 of the advisors sued had joined Empower via that acquisition, according to the lawsuit.
In a federal lawsuit filed on March 13 in the United States District Court for the District of Colorado, the retirement industry giant lobbed allegations of trade secret misappropriation and client poaching against Atomi Financial, which operates under the name Compound Planning, with facilities in San Francisco and New York.
Empower's legal challenge criticized Compound Planning’s recruitment efforts, specifically accusing it of unethical practices by enticing Empower's staff to defect and unlawfully use proprietary information to siphon off clients.
"Compound Planning chooses to poach employees and clients from its competitors, like Empower, by inducing its competitors’ employees to misappropriate trade secrets and engage in other unlawful conduct," it read.
The lawsuit also took aim at Compound Planning's marketing tactics, accusing the firm of deploying comparative advertising that misrepresented and cast aspersions on the services and offerings of competitors, including Empower.
The case saw a new development this week, with a court motion Wednesday detailing a preliminary resolution between the parties.
The proposed agreement, which doesn’t include any admission of wrongdoing, forbids the ex-Empower advisors from reaching out to any client they had under their former firm, as well as people they may have considered as prospects in the six months leading up to their departure from the company.
It also prohibits the breakaway advisors from using any trademarks owned by Personal Capital or Empower “in any manner which is false or misleading,” including false suggestions that they’re still associated with Empower. The advisors are likewise barred from “describing Compound Planning as the "New Personal Capital.”
As part of the settlement terms, Compound Planning is also required to eliminate any mentions of Empower and Personal Capital from its digital and physical marketing materials, including websites, to mitigate comparative advertising conflicts.
Plus, a $400 million Commonwealth team departs to launch an independent family-run RIA in the East Bay area.
The collaboration will focus initially on strategies within collective investment trusts in DC plans, with plans to expand to other retirement-focused private investment solutions.
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