Three Key Provisions of The Broker Protocol

As an experienced financial advisor, you may have heard of the Broker Protocol. This is especially true if you are in the investment world. Although even if you’ve heard of it, you likely still have some questions about what it is and how it applies to you. 

Consolidated Planning is a Protocol For Broker Recruiting member through our broker-dealer, Park Avenue Securities. The protocol governs the client data you are allowed to bring when you change firms. As members of this agreement, we strive to what’s best for the client is what happens when an advisor changes firms.

This article will give you an introduction to the broker protocol and how it applies to your practice. While we will attempt to be as thorough as possible, this article is not a substitute for your legal counsel.

#1 The Book Of Business Provision

The broker protocol is a set of guidelines established by major securities firms to govern the recruiting process of financial advisors. It is a mutual agreement between firms to protect the interests of both you and the firm and minimize client disruptions during the transition process.

For financial advisors considering changing firms, understanding the broker protocol is essential in order to ensure a smooth transition for both you and your clients.

The broker protocol typically includes several key provisions that govern the actions of member firms and their financial advisors. The most important provision is the “book of business” provision, which allows you to take your client lists with you when you move to a new firm. This is vital for advisors as it ensures you can continue to serve your existing clients and build your business at their new firms. 

The book of business is often seen as the most valuable asset of a financial advisor, representing the sum total of the relationships you have built over time. Without it, an advisor would have to start from scratch in building a new client base, which can be a time-consuming and difficult process.

 

#2 The Non-Solicitation Provision

Another necessary provision of the broker protocol is the “non-solicitation” provision. This prohibits you from soliciting your clients to move their accounts to your new firm for a certain period after leaving your current firm. This is designed to minimize disruptions to clients’ investments during the transition process. 

The non-solicitation provision ensures that advisors do not take advantage of the relationships they have built with their clients to gain an unfair advantage in the marketplace.

By preventing advisors from soliciting their clients to move their accounts for a certain period of time, the non-solicitation provision allows clients to make informed decisions about their investments without feeling pressure to move their accounts.

 

#3 Confidential Information Provision

The broker protocol also includes provisions for the protection of confidential information. This is particularly important for financial advisors, as you often have access to sensitive information about your clients’ financial situations. 

The confidential information provision ensures that advisors do not disclose any confidential information to their new firms or use it for their own benefit. This is important to protect the clients’ confidentiality and trust in the advisor.

When you leave your current firm, you may only bring certain client information with you. Typically, this includes the following:

• Client Name
• Phone Number
• Email
• Account Type

Compliance with this provision is essential for a successful transition.

 

What Does The Broker Protocol Mean For Your Career?

It is important to note that the broker protocol is not a law but rather an agreement between firms. Not all firms adhere to the protocol, and some may have their own version. It is important for you to check with their current and potential firms about their protocols before making any sudden jumps in your career.

When changing firms, you need to be aware of the broker protocol and ensure you comply with it. Consolidated Planning is a member of the broker protocol and will work with you to create a smooth, compliant transition. Reach out to our team today to discuss what your move to Consolidated Planning might look like.

 

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