Communication will be necessary when brokers jump ship from their old employer and take clients with them
Employees wishing to move away from a financial firm and take their clients with them will now need to follow some strict rules in the US.
That’s because the SEC has given its approval to a Finra rule that outlines that brokers must send “educational communications” to clients that they want to follow them.
According to a report at InvestmentNews, transferring brokers will have to send a document to their clients outlining the factors that could potentially cause a conflict of interest. This might include any costs associated with a transfer and whether there would be any restrictions that might prevent some of the assets from being transferred.
In addition, brokers will have to send clients a list of questions that they can ask. This has to be included as part of the account-transfer materials.
The new regulation has actually been in process for three years with the original idea being that brokers must disclose their compensation to clients when they hope to transfer them to other firms.
There is no date yet for when the rule will be implemented.
That’s because the SEC has given its approval to a Finra rule that outlines that brokers must send “educational communications” to clients that they want to follow them.
According to a report at InvestmentNews, transferring brokers will have to send a document to their clients outlining the factors that could potentially cause a conflict of interest. This might include any costs associated with a transfer and whether there would be any restrictions that might prevent some of the assets from being transferred.
In addition, brokers will have to send clients a list of questions that they can ask. This has to be included as part of the account-transfer materials.
The new regulation has actually been in process for three years with the original idea being that brokers must disclose their compensation to clients when they hope to transfer them to other firms.
There is no date yet for when the rule will be implemented.
