There are a myriad of reasons why registered representatives and
investment advisor representatives elect to change firms. These
include product offerings, technology platforms, compensation,
cultural fit, or particular practice goals. Most often, new
business opportunities following a transition pay off, but failing
to consider key issues in advance may result in a very bumpy
transition, expensive litigation and E&O insurance coverage
issues. Many departing representatives assume that there is an
inherent right to take clients and their financial information if
he or she established the client relationships or acted as the
primary servicing representative. While the client relationship is
fundamentally important, there are significant contractual and
regulatory issues to consider. With advance planning and by
consulting with qualified legal counsel many pitfalls can be
avoided or at least mitigated.
