To incentivize financial advisors to keep their assets under management with a specific firm, brokerage firms routinely offer financial advisors with up-front payments that are structured as loans that the financial advisor agrees to pay back by signing a promissory note.   Brokerage firms provide these up-front loans with favorable interest rates, the balance of which reduces over time commensurate with the revenue the financial advisors’ book of business generates.

As a general rule, promissory notes are enforceable contracts, and failure to pay the full balance of a promissory note can result in an industry member being forced to pay both the outstanding balance of the promissory note; the brokerage firm’s attorneys’ fees and costs accumulated pursuing the promissory note’s balance; and interest at a default rate.

While promissory notes are generally enforceable, PRM, P.C. regularly advises clients on promissory note issues ranging from an inability to pay the full balance of the note, or disputes concerning the amount owed.