The Securities and Exchange Commission approved Tuesday the Financial Industry Regulatory Authority’s rule requiring brokers to send “educational information” to clients about their move to another firm.
The SEC states in its notice approving the rule that FINRA developed the rule out of concern that former customers “may not be aware of other important factors to consider in making a decision whether to transfer assets to the recruiting firm, including direct costs that may be incurred.”
To provide former customers with a more complete picture of the potential implications of a decision to transfer assets, the rule change requires delivery of an educational communication by the recruiting firm that highlights key considerations in transferring assets to the recruiting firm, and the direct and indirect effects of such a transfer on those assets.