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Financial services is a highly regulated industry; that is very much apparent when advisors transfer between different brokerage firms or go independent via a registered investment advisor (RIA) firm. Navigating broker protocol rules requires careful attention to compliance when transferring client data and accounts, particularly for breakaway brokers, as that information is typically proprietary to the broker-dealer. That’s why broker protocol compliance software has become essential for financial advisors transitioning from one firm to another to ensure they follow compliant transition process protocols and abide by their employment agreement at their former firm.
Prior to their departure, registered representatives should familiarize themselves with all of the protocol’s requirements to ensure they make good, informed decisions during their transition process.
Absent that, financial advisors can wind up making industry news or, worse, be sued for the improper handling of client relationships. It’s best whenever advisors have questions that they lean on legal counsel to ensure compliance rather than be part of potential litigation.
Deal Breakers for Broker-dealers
As financial advisors change broker dealers, they are forbidden from actively enticing former clients to go with them to the new firm. Instead, as per the broker protocol list, they can only solicit clients once they have arrived at the new firm. And they are not allowed to take specific client information with them to the new major firm; that data must remain at the departing firm.
The transitioning advisor must ensure that the old firm maintains all the phone numbers and other specified client information for its clients. Account statements should be filed in an efficient manner so the current broker dealer can begin serving these client accounts via a smooth transition.
Independent Financial Advisors By Contrast
In the registered investment advisor (RIA) world, client relationships remain with the advisor rather than the current firm. The broker dealer transition in this manner is very different from when an independent advisor moves from their current firm to a new firm.
Independent financial advisors can solicit clients to join their firm if interested without fear of breaking broker protocol. The old firm has no major hold on them; clients can follow their advisor if they appreciate their service model.
Key Points When It Comes to Switching Firms
For advisors to have a successful transition along with their clients, they need to be repapered at the new firm. That includes collecting information such as client names, account numbers, and other personal data.
To ensure that all of this is input and correctly done, firms utilize broker protocol compliance software to make the transition process successful while meeting regulatory requirements.
Broker Protocol Compliance Software for a Smooth Transition
Departing advisors can eliminate paperwork and cut transition time in half with the right broker protocol compliance software. OnBord puts the power of SMS to use to benefit the new firm while maintaining strict compliance with FINRA and SEC requirements. Clients are securely sent an SMS message where they upload all of their financial information. And when clients inevitably abandon the transition process, OnBord sends a gentle SMS reminder encouraging them to complete any necessary information.
Firms that manually handle client data, including phone numbers and account numbers, often face clerical errors or missing data that can jeopardize broker protocol compliance. That’s among the reasons to leverage technology in an efficient manner — to ensure that client relationships are maintained, regulatory requirements are met, and your book of business remains intact during firm changes.
Ensure Compliant Advisor Transitions with OnBord
Schedule a demo today to see how OnBord’s broker protocol compliance software can help you maintain your book of business, ensure regulatory adherence, and create a seamless client experience through secure SMS technology. Our automated system eliminates paperwork, reduces transition time, and keeps you compliant every step of the way.
