FINRA Client Terminated Broker

On May 10, FINRA issued investor alert on when a broker leaves.

  • Follows FINRA Apr. 2019 notice communication for departing reps.
  • Investor alert on how clients will be communicated with, when a broker leaves.

Investor Guidance

  • Complete answers about departing broker allows informed decision on account.
  • Broker departure should not disrupt the service the firm provides its customers.
  • Inform customer of choice to keep assets at current firm, and be serviced by a
    newly-assigned broker, or a different broker, or transfer assets to another firm.
  • Provide contact information for departing broker if latter consented to doing so.
  • Information firm provides on a departing broker must be balanced, not mislead.
  • FINRA rule require when a broker moves to new firm, firm where broker moves
    must deliver former customers educational communication about asset transfer.

Issues Clients Should Consider

  • The document highlights conflict-of-interest and cost considerations of transfer.
  • Consider whether broker advice is aligned with their investment strategy, goals.
  • Consider transferability of assets, costs associated with managing those assets.
  • As well as taxes, old firm may charge account-closing fees, your broker should
    explain pricing structure of new firm and how the ongoing cost would compare.
  • New firm may not offer investments bought in past or considering in the future.
  • Consider if have access to services, support, online resources that meet needs.