Chaning broker/dealer -- ethical question

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Aug 22, 2005 3:27 pm

My husband is in the process of changing broker/dealer (one indy to another).  My husband specializes in 401k's and other qualified retirement plans.  The principal at his old OSJ told him that he has no interest in pursuing this market, (that is a main reason he is changing), however my husband got a call this morning from a contact at one of his 401k provider's that this principal is pursuing a plan that he has been prospecting and where the controller is my husband's personal client.  The principal had called the provider and asked for a copy of my husband's proposal on this plan!  Is this ethical?  How should my husband respond?

Aug 22, 2005 7:55 pm

Expect more of this type of news, concerning your husband's other clients and prospects. He needs to solidify his relationships with his clients and prospects because now they're fair game to his old firm.


Is this ethical? Morally, no. But technically, yes; since now your husband is the competition. The question is, will the prospect hand over the proposal to his old firm?


This is how I would play it: First of all, don't make a big deal of the proposed handover to the prospect. When discussing the proposal with the client, be sure to re-emphasize the additional benefits, from agreeing to this proposal, your prospect will enjoy now that your husband is indy. Then, casually bring up that you heard XYZ Firm (husband's old firm) was panicking because no one else at XYZ Firm handles retirement plans and they wanted a copy of your husband's proposal to copy and try to put something together at the last minute. 


This type of conversation should effectively destroy any credibility XYZ Firm has with your husband's prospect.


As far as any friendship with anyone at your husband's old firm, forget it. Now, it's war.

Aug 23, 2005 12:01 am
doberman:

Expect more of this type of news, concerning your husband's other clients and prospects. He needs to solidify his relationships with his clients and prospects because now they're fair game to his old firm.


Is this ethical? Morally, no. But technically, yes; since now your husband is the competition. The question is, will the prospect hand over the proposal to his old firm?


This is how I would play it: First of all, don't make a big deal of the proposed handover to the prospect. When discussing the proposal with the client, be sure to re-emphasize the additional benefits, from agreeing to this proposal, your prospect will enjoy now that your husband is indy. Then, casually bring up that you heard XYZ Firm (husband's old firm) was panicking because no one else at XYZ Firm handles retirement plans and they wanted a copy of your husband's proposal to copy and try to put something together at the last minute. 


This type of conversation should effectively destroy any credibility XYZ Firm has with your husband's prospect.


As far as any friendship with anyone at your husband's old firm, forget it. Now, it's war.



Hey Dobie-he's already indy.  Moving from one Indy firm to another....

Aug 23, 2005 11:40 am

When an NFL Defensive back intercepts a pass.....He is supposed to run towards the goal! There is nothing immorral or unathical about getting business from the competition. If he was snaking clients while a the same firm..that's scummy (and still happens all..the...time). It's our job to play as hard as we can for our respective firms!

Aug 23, 2005 12:34 pm

There's nothing wrong with competition.  The ethics in question is that the principal called the fund company (401k provider) and asked for a copy of my husband's proposal -- instead of the principal going back to the plan sponsor and doing his own fact finding and requesting his own proposal.

Aug 23, 2005 12:43 pm

IIII  see!! You are right.... it can be ugly.

Aug 24, 2005 12:01 am

Suebee


did the fund company/provider give the plan to the principal?

Aug 24, 2005 7:50 am

No, the person at the fund company called my husband just to let him know the request was made, but they will not give it to the principal.  The fund company knows that my husband is changing broker/dealer.

Aug 24, 2005 9:09 am

So what's the problem?


As long as your husband is still with his current BD then his CURRENT principal has the right to review all of his presentations.


The ethics in question are actually your husband's.  Until he leaves his current BD he shouldn't expect to receive a free ride on current business (or pending business) that he plans to transfer.  The principal has a right to try and conserve business (or pending) business relationships that were forged under his supervision.

Aug 24, 2005 10:25 am

suebee


Im going to turn this around a little.  Did your husband take any client information with him (like copies of plans etc)?  If so he might want to return it.  He's opening up a huge can of worms if he did.   I've been through the legal process and thats a huge part of it.  If his old firm can prove he took any client/firm information you guys have some real problems. 


By the way im not trying to point fingers i just don't want you or your hubbie to deal with the crap i did.  By the way I didnt take any info with me when i made my jump however the old firm didnt believe me and it got ugly.