The financial services profession is about more than just numbers. It's about helping people navigate life's complexities.
Financial advisers serve an important role as their clients prepare for milestones. So it's no surprise that the client-adviser relationship is often a sustaining one.
With that in mind, imagine the confusion a client might feel when he or she is informed that their financial adviser, with whom they have built a trusted relationship, is suddenly no longer their financial adviser.
We know this happens in our profession, with data suggesting that each year roughly 5% of advisers change firms. And as soon as they do, most firms immediately reassign their clients.
For years, our profession hasn't had guidance for communicating with clients in this situation, which has meant firms often attempt to retain clients even if those clients would prefer to continue their relationship with the adviser, regardless of the adviser's firm affiliation.
This lack of transparency and limitation of choice fuel negative perceptions and overshadow the good work we do in this noble profession.
That's why we were pleased that the Financial Industry Regulatory Authority Inc. recently published Notice 19-10, clarifying its expectations of member firms relating to communications with clients with transitioning advisers. This is a meaningful step for our profession that recognizes the importance of choice and continuity of service for clients, so I thank Finra for its commitment to client rights.
As firms were leaving the protocol for broker recruiting, last year I called for Broker Protocol 2.0 — going beyond the minimum requirement of allowing financial advisers to retain client contact information when moving from one firm to another to a higher call of duty that embraces freedom, choice and book ownership.
With the introduction of Notice 19-10, I am enthusiastically renewing that call, encouraging our industry partners and regulators to further assess what is truly in the best interest of financial advisers and their clients and to embrace a more meaningful, deliberate and continuity-focused standard of care.
In the spirit of doing what is best for clients, firms should support clients' rights to be informed of their options — without clients having to ask — by proactively providing an adviser's contact information and if approved by the client, duplicating records to their adviser at his or her new firm. Sharing important documents like financial plans, statements and notes is paramount to the continuity of delivering seamless service and quality financial advice.
We should be doing all we can to embrace and preserve the adviser-client relationship, and to help limit the extent of the interruption clients experience.
Admittedly, helping clients remain with their transitioning advisers can be costly. However, supporting clients' rights to choose their firm and financial adviser and supporting a smooth transition is not only good business in the long run — it's the right thing to do.
It's noble and personal work that advisers do, and it's up to the firms they affiliate with to foster an environment of trust. Increased transparency and collaboration among firms to encourage and enable true choice will lead to a stronger level of trust among clients and advisers alike, and ultimately elevate our profession as a whole.