A pair of former Edelman Financial Engines advisors is going to court to break their non-solicitation contracts, claiming that rumors of a failed sale of the firm had “reduced employee and client confidence.”
John Sayers III and Eric Pailing independently filed their suits in California federal court, naming Edelman Financial Engines as well as several acquired subsidiaries. The duo claims that California state law prohibits non-solicitation and non-compete vows in employment contracts.
Both Sayers and Pailing have since registered with Prime Capital Financial. Edelman sued the firm in recent months, accusing Prime Capital of enticing advisors to leave Edelman while allegedly stealing trade secrets and confidential client information in the process.
According to the court filings and SEC records, Sayers registered in the industry in the 2000s, with stints at Charles Schwab and MetLife before joining The Mutual Fund Store in 2014 (the same year as Pailing).
The duo believes they signed non-solicitation contracts at the time, but claim they do not have access to them. In 2016, Edelman Financial Engines acquired The Mutual Fund Store, with Sayers and Pailing joining the firm.
However, Sayers and Pailing came to believe they couldn’t stay with Edelman because of what they considered to be “short-sighted policies and fundamental corporate changes.”
According to Sayers’ suit, he was worried about leadership transitions and changes “going back five years,” including rumors of a potential failed sale after firm leadership allegedly told employees the company wasn’t for sale.
Sayers also criticized Edelman’s alleged decision to end its relationship with financial advice personality Dave Ramsey, who Sayers said was a “lead source for business” in Fresno, Calif. The firm also allegedly eliminated local marketing, including the company’s radio show and advertising.
According to the suit, Sayers originally had a consumer service associate reporting directly to him, allowing him to provide direct oversight and ensure accountability. However, Edelman allegedly changed the organizational structure so that the CSA would report to a “centralized” CSA manager rather than the advisors they supported.
“This degraded support structure created quality control issues, increasing the risk of errors, undermined client confidence, and prevented Mr. Sayers from providing the personalized service that clients expect and deserve from their financial advisor,” the suit read.
Sayers claimed he was in an untenable situation, where he could comply with what he considered “overly broad and unlawful restrictive covenants,” or challenge them in court at the risk of being sued. The complaints in Pailing’s lawsuit mirror Sayers’ allegations.
These lawsuits aren’t the first time former employees have criticized Edelman’s CSA administrative practices.
In 2024, several former Edelman advisors, including Josh Hederick, Tim Dowden and Jennifer Staben, filed complaints to break their non-compete agreements with their prior employer.
Staben claimed that, beginning in April 2023, Edelman instituted a policy requiring advisors with less than $100 million in managed assets to use a “CSA Pool” of associates who were not partnered full-time with a particular advisor.
Staben and Hederick both argued that the CSAs Edelman provided hindered customer service, and that they complained to the firm to no avail. Hederick was also previously with The Mutual Fund Store before Edelman acquired the firm.
Like Sayers and Pailing, Staben, Hederick and Dowden all joined Prime Capital Financial after leaving Edelman. Staben and Sayers are both represented by Michael Seitz, while Servando Sandoval represents Pailing. The attorneys work for Spencer Fane, a Kansas City-based law firm that often provides legal services for Prime Capital.
According to their lawsuits, Sayers and Pailing resigned on Dec. 12, but did not take confidential client information with them. According to SEC records, Sayers registered with Prime Capital the same day, while Pailing registered on Dec. 15.
In its suit filed in November, Edelman claimed that Prime Capital poaches its advisors, encouraging them to remain at Edelman and use their role in the company to access confidential client information in a “coordinated and concealed scheme to pillage” the firm.
In its response filed last week, Prime Capital argued the stakes at play in Edelman’s filing are already being addressed in other cases around the country filed by Edelman against former employees who left to join Prime Capital, which was later added as a defendant in these lawsuits.
Prime Capital also questioned Edelman’s decision to file its suit in Delaware federal court, rather than Kansas, where Prime Capital is located. The firm did not respond to a request for comment on this story prior to publication.
In response to questions, Edelman did not address whether Sayers and Pailing were among the approximately 40 advisors they suspected were being enticed by Prime Capital, but Allison Amadia, the firm’s chief legal and risk officer, said that protecting client relationships built over decades is the firm’s “top priority.”
“We will always put our clients first and do what is necessary to protect their best interests, including investing in our services and employees who make a difference for millions of clients each day,” she said.
