When an advisor is meeting with prospective or current clients or delivering clients their periodic statements, it’s common for said advisor to discuss the returns the advisor’s investment portfolios have delivered over time. The longer the time period, the better the picture of performance.
But for advisors moving from one brokerage firm to another, or from a wirehouse or independent broker-dealer firm to another BD or RIA firm, there’s a problem with that common scenario, according to John Mackowiak of Advyzon.
While a “breakaway broker” can take along some client information with them under the Protocol for Broker Recruiting, most can’t take along that historical performance data and plug it into a new portfolio management system at their new firm unless they first clear with their former employer that they can take that data with them to their new gig.
Under the Broker Protocol, advisors who move from one brokerage firm to another have the right to take along clients, though there are caveats to that sweeping statement. First, you need to make sure that both the firm you’re leaving and the firm you’re joining are members of the Protocol.
When leaving a Protocol member firm, advisors can take some basic client information with them, as the FAQ of the Protocol directory lists: “the name, address, phone number, email address, and account title for every client that you personally serviced at the firm, subject to certain limitations …. You are not permitted to take any other documents or information concerning the accounts of your clients.”
There have been some high-profile departures from the Protocol since the fourth quarter of 2017 — notably Morgan Stanley, UBS and Citigroup. However, there are still 1,760 Protocol member firms as of May 2018, according to the Protocol’s registry. While the original Protocol covered wirehouse firms, it has grown to include many independent broker-dealers; there are also hundreds of investment advisory firms that are members.
A recent Fidelity poll found there was heightened concerns among advisors about how those high-profile departures are affecting advisors’ ability to switch firms successfully, whether they’re moving from one brokerage firm to another or going to an independent BD or forming or joining an RIA firm.
‘An Unpleasant Surprise’