Essential Checklist For Financial Advisors Changing Firms

Changing firms is a significant decision for any financial advisor, whether you’re a broker or hybrid. It requires careful planning and adherence to legal and ethical standards to ensure a smooth transition. This checklist will guide you through the essential steps to consider before making your move, to keep you in compliance and set the stage for continued success.

1. Review your employment agreement.

Before making any decisions, thoroughly review your current employment agreement. Understand any restrictive covenants, nonsolicitation clauses, or noncompete clauses that could impact your ability to practice after you leave. It’s advisable to consult with one of our experts who specializes in employment changes within the financial services industry to interpret any complex clauses.

2. Comply with The Broker Protocol.

If your current and prospective firms are signatories to The Broker Protocol, this agreement allows you to take certain client information when you change firms, without facing legal consequences. Make sure that you understand exactly what information you can (and cannot) take with you, and adhere strictly to these guidelines to avoid potential legal issues.

3. Plan your client’s communication strategy.

Develop a strategic communication plan for reaching out to your clients after your move. It’s crucial not to discuss your plans with clients while still employed at your current firm, as this could breach contractual and fiduciary duties. Once you’ve moved, if you are not contractually prohibited from contacting your clients, contact them as soon as possible to explain the situation. Inform them that you were not legally allowed to discuss the move beforehand, and outline the benefits of your new position and how it will enhance the service you provide.

4. Ensure compliance with regulatory requirements.

When changing firms, check with the relevant regulatory bodies to make sure that you’re compliant with all necessary requirements. This includes updating your registration and handling any compliance issues that could arise during the transition.

5. Secure your licenses and certifications.

Ensure that all of your professional licenses and certifications are up-to-date and transferable to your new firm. This may require some coordination between both firms to prevent gaps in your ability to practice.

6. Manage your digital footprint.

Once your move is public and compliant with your agreements, update your digital presence, including your LinkedIn profile and any other professional listings. Your new contact information must be easily accessible to clients and professional contacts.

7. Prepare for potential client transition issues.

Although retention rates can regularly approach 100%, be prepared for some clients to decide not to follow you to your new firm. Respect their decisions, and provide them with all of the information they need to continue receiving service from your old firm when they choose to do so.

8. Secure data and client files.

Any transfer of client files and data must be conducted securely and in compliance with both firms’ policies and privacy laws. Only take client information that is permitted under The Broker Protocol and your employment agreements.

Changing firms is a complex process that requires meticulous planning and adherence to legal and ethical standards. By following this checklist and seeking guidance from AdvisorLaw’s experts, your transition can be executed as smoothly as possible — minimizing disruption to your clients and setting the stage for success at your new firm. Your commitment to professionalism and compliance during this time will serve to reinforce client trust and loyalty.

If you’re interested in learning more about our transition services, please fill out the form below for a complimentary consultation.