The Protocol for Broker Recruiting (“Broker Protocol”) has been a major topic of discussion. As an integral part of a typical transition strategy, it is important for advisors to understand the background, requirements and limitations of the Broker Protocol.

Background

The Broker Protocol originated as an agreement among three major wirehouse firms (Citigroup-Smith Barney, Merrill Lynch and UBS) as a measure to stop the limitless lawsuits and temporary restraining orders (“TROs”) that were rampant with every financial advisor “on the move”.

The Broker Protocol was intended to cut through the complexities and supercede certain agreements, provided all provisions of the Broker Protocol are followed by a transitioning advisor. The transitioning advisor can take a limited amount of personal information with them, but may not take any account information or personally identifiable information, such as account number or social security numbers.

What information can a “Breakaway” Advisor take?

The first step a breakaway advisor should take is to validate that the firm they are moving to is also a member of the Broker Protocol. Otherwise, the provisions do not afford the advisor or the new firm any protections. A transitioning advisor can retain the following information:

• Client Name(s)
• Address(es)
• Phone/Fax Number(s)
• Email Address(es)
• Type of Account(s) or Account Name(s) — BUT NO Account Numbers!

As noted above, a departing advisor cannot bring person information, such as the account number(s), a client’ social security number or any financial documents on file with their existing firms, including statements, workpapers, investment policy statements or related documents. Although these may be created by the transitioning advisor, this information is the private work product the existing employer.

For more information on transitioning or the Broker Protocol, please contact us. Please consult with your compliance or legal counsel prior to retaining any information from your prior employer.

Who’s a party to the Broker Protocol?

Each Thursday, the firms that join and withdraw from the Broker Protocol are published are distributed to the parties to the agreement. The good folks at RIABiz maintain a current list of the Members of the Broker Protocol.