The Broker Protocol
The Broker Protocol was established in 2004 basically as a truce between three of the top warehouses (Merrill, Citi/Smith Barney) and UBS) in order to reduce the risk of litigation between firms as advisors moved from one firm to another. This truce established specific rules and guidelines surrounding a broker leaving one Protocol firm to join another Protocol firm all in the name of furthering clients’ privacy interests and freedom to choose their own broker. Since 2004, nearly 2000 firms have joined the Protocol.
Simply put, provided the firm you are departing from and the firm you are joining are members of the Protocol, you are permitted to take the name, address, phone number, email address, and account title for every client that you personally serviced at your former firm, subject to certain limitations for partnerships and retirement agreements. Most importantly, you are not permitted to take any other documents or information concerning the accounts of your clients.
In order to take this information though, you must claim protection under the Protocol. You should do this with a well-crafted resignation letter to your branch manager that includes a list of client accounts you are retaining. You are only allowed to take with you five bits of client information: client name, client address, client phone number, client email address, and account title. The list to your manager must include client account numbers. Your list, the list you are permitted to take with you, cannot include account numbers. Provided you follow the Protocol, upon your arrival at your new firm, you (and only you) can solicit the clients on your list.
It is important to speak to an attorney who is familiar with the industry and the Broker Protocol before you transition to a new firm. If you have an employment agreement that has a non-solicitation agreement and/or prohibits you from retaining your customer list, provided you comply with the Broker Protocol and both firms are members of the Protocol, you and your new firm should not be liable for retaining, using and soliciting clients on your Protocol List. Transitioning to another firm can be complicated and filled with land mines. Speaking to an experienced securities employment attorney first, before you make a move, can alleviate much of the stress and turmoil associated with any move.
For the last 30 years, Gregory Tendrich has concentrated his practice of law in the securities industry arena. For nearly a decade he served as Assistant General Counsel to well-known regional and national broker dealers. For the last 20 years he has advised financial advisors stock brokers, registered investment advisors, and other registered and non-registered brokerage employees on all facets of the securities industry. If you have questions regarding the Broker Protocol or other employment or registration related issues, call 561-417-8777.