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Reassigned Investment Accounts
The relationship you have with your financial adviser is a key element to meeting your long-term financial goals.
If your stockbroker or investment adviser leaves his or her employer, you should make sure that you understand how and why it happened. It could be as simple as a move to another city or retirement, but there could be other reasons too. It is critical to find out what happened before deciding who will help you with your investments going forward. After all, it’s your money and your future that is at stake.
How reassigned accounts happen
People leave jobs, voluntarily or otherwise, and investment professionals are no different. When an adviser or broker leaves their position with a firm, they may leave client accounts behind. In some cases, the firm may assign the client account “to the house” or to a general account at the firm without an assigned individual managing the account. In these cases, the investor might not continue to receive the same services they had received before their account was reassigned to the house, even though the firm continues to collect the same fees from the client.
Broker-dealers and investment advisers have duties under their respective regulatory structures to ensure that the services they charge you for are actually provided. Keep an eye on your accounts and ask good questions. What would happen to my account if you left the firm?
Follow up promptly if you receive notice that the professional you now work with moves on from their job.1
What to expect if your representative leaves
You have choices when the investment professional you work with departs their firm or quits the financial industry entirely.
Ask questions and look into the situation before allowing your account to be reassigned to another representative within their firm or deciding to transfer the account elsewhere.
If you received service from a call center, the expectations are different since the departure of call center staff would not impact your account.
However, if you worked with a specific adviser, broker, or team, you should receive notice from the firm so you can make a timely and informed choice about where to maintain your account and so you do not experience an interruption in service as a result of your adviser’s or broker’s departure from the firm.
Find out why your representative left
Departures may be voluntary or involuntary. Ask questions to understand what happened to the professional you’ve worked with.
If asked, the firm may provide you with additional information, including your representative’s new contact information. Firms may have policies with respect to whether a departing representative can communicate with you or solicit you to transfer your account to another firm. These expectations usually depend upon whether the departing representative was an employee or an independent contractor, and whether there are contractual agreements indicating whether the account is associated with the departing representative or the firm.
Information regarding the reason for the representative’s departure may be available on Investment Adviser Public Disclosure (IAPD) and FINRA BrokerCheck. Firms have 30 days (from the date of departure) to report that information and may not initially or always provide complete information. BrokerCheck and IAPD are free tools to research the background and experience of financial brokers, advisers and firms, enabling you to confirm whether a person is registered and view additional information regarding employment history, regulatory actions, customer complaints and other reportable matters. You may also contact your state securities or provincial regulator who can often help explain or interpret the information found on IAPD or BrokerCheck.
Establish and understand service expectations
Firms should have policies and procedures designed to ensure that you are aware of how your account(s) will be serviced after your representative leaves the firm. The firm should promptly communicate how your account will be serviced, including how and to whom questions and trade instructions should be directed. The timing of correspondence and other communications from the firm can vary greatly, from a matter of days to more than 30 days after the representative’s departure.
A new representative may be assigned to you, or your account may be serviced by a call center on either a temporary or permanent basis. In the absence of a reassignment, you can always request service from the branch manager of the office where your representative had been located or from the firm’s home office. Check your account statement for an assignment to a new representative or for home office contact information.
Be proactive when your representative departs – contact the firm for answers to your questions immediately. Do not assume that your account is being monitored. Once assigned a new representative, Check IAPD or BrokerCheck to verify registered individuals or firms.If you are not satisfied with the broker’s experience or background (e.g., previous customer complaints or regulatory actions), you can request another representative or move to a new firm.
Things to think about before you transfer an account
Following your representative’s departure, you may be contacted with a request to consider transferring your account to their new firm. Asking questions about the type of financial firm, the services offered, and the fees for those services will help you decide if the new firm is a good fit when considering your financial goals and objectives. Always make sure your adviser or broker is properly registered with your state securities or provincial regulator.
If your adviser or broker leaves, find out why the person left, how your account will be serviced at the current firm, and carefully consider whether transferring your account to a new firm or remaining with the broker who left is the best option for you.
Posted: March 2022
1 See, e.g., In the Matter of Regal Investment Advisors LLC et al, Investment Advisers Act of 1940 Release No. 5865 (September 16, 2021). Click to read.
NASAA has provided this information as a service to investors. It is neither a legal interpretation nor an indication of a policy position by NASAA or any of its members, the state and provincial securities regulators. If you have questions concerning the meaning or application of a particular state law or rule or regulation, or a NASAA model rule, statement of policy or other materials, please consult with an attorney who specializes in securities law.