BEFORE YOU GO
DETERMINE IF THE BROKER PROTOCOL IS AVAILABLE TO YOU
In 2004, several of the major wirehouses created the Protocol for Broker Recruiting. Advisors coming from firms that complied with this protocol would be free to solicit customers they serviced while at their former firms, but only after they have resigned and joined their new firms.
Please look at the protocol guidelines as well as any relevant agreements you may have with your current firm and review those with legal counsel. We can help determine if the Broker Protocol is an option for you and can guide you through the process.
LEAVING A PROTOCOL FIRM
What you can take:
- Client names
- Account registrations (but not account numbers)
- Client addresses
- Account names (but not account numbers)
- Telephone and fax numbers
- Email addresses
What you can’t take:
- Account numbers
- Financial statements
- Client files or screen shots
- Contact management notes or electronic files
- Financial and estate planning documents (including copies)
- Confidential information (Social Security numbers and dates of birth)
- Any information deemed to be confidential and/or proprietary
LEAVING A NON-PROTOCOL FIRM
In general, transitioning advisors are free to contact their clients after they resign, as long as they do not use firm data to do so. However, they cannot solicit their clients to move their business or to discontinue working with the advisor’s former firm.
Many courts and arbitration panels have found that “solicitation” does not extend to generic marketing in the form of announcements, so many advisors choose to inform their contacts of their move through social media channels.
The state of New York may grant an exception and allow the retention of client data if the advisor can demonstrate a pre-existing relationship with the client prior to joining the non-protocol firm. It is critical to review your specific circumstances with legal counsel.
PROTECT YOUR BUSINESS WITH INSURANCE
All advisors, including registered producing sales assistants that have their own rep code, are required to be placed on Arete’s Errors and Omissions Insurance policy immediately, regardless of your former coverage time period. Details of Arete’s E&O Insurance coverage can be found in the Resources section at the end of this guide.
PREPARE FINRA Rule 2273 Communication
In March 2016, the SEC approved the adoption of FINRA Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers). Rule 2273 establishes an obligation to deliver an educational communication in connection with member firm recruitment practices and account transfers.
Your Arete Transitions Team will help prepare this notification that will be sent to your clients in your initial 90 days.
