Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

The Pitfalls of Transitioning Between Firms

Posted by William Byrnes on August 26, 2011


If you’re considering transitioning your book of business to a new firm, maintaining the confidentiality of client information should be your principle concern. Accomplishing  a move without becoming the target of a lawsuit can be a daunting task. However, there is a protocol of best practices that if followed correctly can significantly lower the risk of violating confidentiality.

In 2004, three wirehouses – Citigroup Global Markets, Inc. (“Smith Barney”), Merrill Lynch, and USB Financial Services, Inc. – created the Protocol for Broker Recruiting (the “Protocol”). The Protocol’s objective is to protect clients’ privacy and flexibility when choosing Registered Representatives (“RRs”) – especially RRs who are switching firms. By reducing litigation over RRs transitioning to new firms, the high costs associated with competitive recruiting efforts can be minimized and client information can remain protected.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber)

For previous coverage of broker-dealer issues in Advisor’s Journal, see  Is a Hybrid Practice Model Right for You? (CC 11-46), What’s Driving the Increasing Appeal of the RIA Model? (CC 11-69).

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