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Brokers breaking away from their current firms to join smaller practices or branching out on their own is becoming a popular trend. As a broker, once you have made a final decision to either change firms or go independent, you need to carefully review the impact your move will have on your current practice and on your book of business. While your excitement can drive you to move forward quickly, be conscious of the need for due diligence and consider the impact of the change on your clients, your career and your compensation.

Financial professionals transitioning their practice typically have three concerns:

  • Client retention – How many clients will move with me? Will I lose any top clients?
  • Asset retention – Are all of my assets portable to the new firm?
  • Revenue stream resumption – How quickly will the assets be moved over and settled?

The Protocol

For many firms, the first two of these are governed by the Protocol for Broker Recruiting, which was created by three major wirehouses to address clients’ privacy and interests when their financial advisors move between firms. Since its 2005 introduction, over 1,300 financial services firms have adopted the Protocol to address broker moves.

The Protocol states that if the departing representative, and the new firm, follow the Protocol, the departing broker and the new firm do not have any monetary liability to the representative’s former firm. In exchange, the broker “may take only the following account information: client name, address, phone number, email address, and account title of the clients that they serviced while at the firm” and is prohibited from taking any other documents or information. Furthermore, the departing broker cannot solicit former clients until after joining the new firm.

Determining whether the firm you are leaving and the firm to which you are going are governed by the Protocol is a critical first step. Lists of signature firms can be found online; getting that information will help you plan for transitioning clients and their accounts without creating legal and financial liabilities.