Non-Broker Protocol breaks can be challenging if you are not prepared for what could happen before, during and after your transition. If you are considering transitioning out of your firm, the first thing you should do is find out if your firm participates in Broker Protocol. The Broker Protocol is an agreement between firms enabling advisors to leave one for another amicably. The agreement outlines the pieces of client information that the advisor can take with them and dictates the process for leaving and communicating with clients.
Many firms in the industry do not participate in the protocol, which means that there is no predetermined agreement about what you can take when you leave. In other words, you must assume that you cannot take client information with you or solicit clients. Ultimately what you can and cannot do upon exiting will come down to what's in your employment contract. Likely the contract you originally signed will have a nonsolicitation clause that could last anywhere from six months to several years. You will want to contact an attorney to review your contract and give you their interpretation of what is and is not allowed, and what could potentially be negotiated.
In addition to understanding what's in your contract, you'll want to keep the following things in mind as you transition out of your firm.
1. Your resignation date will not necessarily be your final date at the firm. During a non-protocol break, it is likely your attorney will contact counsel at your current firm when you resign. Your attorney will then either negotiate a deal for you or you will have to ride out the terms of your contract.
2. During a "a quiet period" you will not be able to tell anyone, especially your clients, that you are leaving. The "quiet period," also known as "garden leave" is the time between your resignation date and your agreed upon final day at the firm. You can only start contacting clients AFTER that period is over.
3. Local leadership will have a say in how and when you exit. Additionally, they could be the determining factor in what client information you can take. (This is especially true if you are at an insurance broker/dealer.) Regardless of your relationship with your local manager, you should be prepared for a nonamicable exit, which means you will not be able to communicate with clients nor take their information when you go.
4. Use your garden leave time wisely. Although it can be a frustrating time, use the days and weeks before you leave to get yourself organized. Begin thinking about the order in which you will reach out to your clients and start formulating your communication plan, including your phone "talk script" and follow up email copy. Depending on where you are transitioning to, you may have transition support. If not, hire a transition specialist who can help you prepare and will step in to help you publicly source client information. This will be your only option for gathering client Information during a nonamicable break.
5. Do not do anything "out of the ordinary" during the quiet period. This is a critically important point and should be taken into consideration even before you resign. If you begin printing out client documents or looking at client information that you do not normally look at, your compliance department could take notice. If you conduct activities that could be deemed as a violation of your agreement, your firm could file a temporary restraining order against you, forcing you into litigation.
6. Make sure your clients know what to expect. If you are moving to a new custodian, your clients' accounts will have to get transferred over. Make sure you know exactly what the client experience will look and feel like and give clients a heads-up before the custodian contacts them. For example, the DocuSign email they will receive from the custodian may be from an email address they do not recognize and may look "suspicious" at first glance.
7. Be prepared for the fact that things will inevitably go wrong. Even with transition support, accounts may be NIGO, paperwork may need to be redone, and DocuSign links may need to be re-sent. Expect to dedicate at least one month to transitioning accounts and communicating constantly with clients. Continue to update clients and set expectations along the way.
8. There will be a learning curve for both you and clients. Signing up for new tech vendors is exciting but can also be overwhelming. Most new logins will require two-factor phone authentication, and some tech integrations will require you to manually turn them on. Test out every log-in and integration before rolling out to clients.
9. Be prepared for some clients to drag their feet on signing paperwork … and for some to stay behind. After your initial round of phone calls to let clients know you are leaving, you will likely have to start a round two. You may find that some clients do not want to leave your former firm. Others may simply drag their feet on signing paperwork. Do not dwell on the clients staying behind. Have conviction in why you are leaving and spend your time focused on the clients who are transitioning with you.
Although all this may seem overwhelming, keep in mind that tons of advisors have successful transitions each year. While there is a lot to know and prepare for logistically, the most critical component of a successful transition is the strength of the advisor's relationship with each client. If you set proper expectations and thoughtfully craft your communications, you can bet on having a relatively smooth transition with your book of business intact.
Penny Phillips is the co-founder and president of Journey Strategic Wealth.